UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-K
                                   (Mark One)
        |X|       ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
            OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

                   For the fiscal year ended December 31, 1998

                                       OR

                TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
            OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

                          Commission file number 0-610
                               EQUITY OIL COMPANY
             [Exact name of registrant as specified in its charter]

                Colorado                                 87-0129795
         (State or other jurisdiction of              (I.R.S. Employer
          incorporation or organization)            Identification Number)

      10 West Broadway, Suite 806                          84101
          Salt Lake City, Utah                          (Zip Code)
    (Address of principal executive offices)

       Registrant's telephone number, including area code: (801) 521-3515

           Securities registered pursuant to Section 12(b) of the Act:

     Title of each class          Name of each exchange on which registered

          None                                         None

           Securities registered pursuant to Section 12(g) of the Act:

                     Common Stock (par value, $1 per share)
                                [Title of class]

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes x/ No

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation S-K is not contained  herein and will not be contained to the best
of  registrant's  knowledge,  in  definitive  proxy  or  information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ x/ ]

As of March  10,  1999,  12,629,440  common  shares  were  outstanding,  and the
aggregate market value of voting stock held by  non-affiliates of the registrant
was approximately $15,000,000.

                       Documents Incorporated by Reference
1.  Definitive  proxy  statement to be filed in connection  with Issuer's Annual
Stockholders'  Meeting  to be held on May 12,  1999  and more  particularly  the
information  contained on pages 2 through 5 are  incorporated  by reference into
Part III of this report.
                                                                 Total Pages 42 
                                    

<PAGE>




                                     PART I
ITEM 1. BUSINESS

GENERAL DEVELOPMENT OF BUSINESS

Equity Oil Company  ("Equity" or "the Company") was originally  incorporated  in
the state of Utah in 1923. In 1958, it was merged into its subsidiary, Weber Oil
Company, a Colorado  corporation.  The surviving company adopted the name Equity
Oil Company.

Equity  is an  independent  oil  and gas  exploration  and  production  company,
currently  conducting  its business in nine states and two  Canadian  provinces.
Equity  is  also  a  50%  shareholder  in  Symskaya  Exploration,   Incorporated
(Symskaya)  which is licensed to operate in Russia.  Headquartered  in Salt Lake
City,  Utah,  the  Company  also  maintains  an  exploration  office in  Denver,
Colorado,  and a field  office in Vernal,  Utah.  The Company  has 16  full-time
employees.

More  than 90% of the  Company's  revenues  come  from the sale of crude oil and
natural gas. Accordingly,  the Company continually seeks to increase its oil and
gas production.  The keys to increasing  production are the  replacement,  on an
annual basis, of current  production,  as well as achieving  additional  reserve
growth.

The Company's  strategy to replace  production  and increase its oil and natural
gas  reserves on an ongoing  basis is  comprised  of a balanced  approach in the
areas of focused exploration drilling, development drilling and exploitation and
the acquisition of proved reserves.

The Company's exploration office in Denver is responsible for the generation and
review  of  exploration  prospects,  and  participates  in the  planning,  where
necessary,  to drill the prospects.  These include prospects developed in-house,
as well as those presented by independent  third parties.  The general  drilling
practice  of the Company is to  participate  in projects on a 25% to 50% working
interest basis.  Participation  varies with each prospect  depending on location
and the attendant financial and technical risk.

In addition to its exploration  ventures,  the Company works in conjunction with
other working interest owners in producing  properties to identify projects that
will develop and exploit the productive capacities of existing wells and fields.
These projects include development drilling,  production enhancement,  operating
cost reductions, and other types of activities.

The Company also investigates  opportunities to purchase interests in properties
with  existing  production.  During  1996  and  1997,  the  Company  replaced  a
significant   amount  of  its  production  through  the  purchase  of  producing
properties. These purchases have, in turn, produced additional developmental and
enhancement projects. No producing properties were purchased in 1998.

The Company has conducted  international  exploration  in Russia through its 50%
ownership of Symskaya.  Symskaya operations were significantly  curtailed during
1998 and will be again curtailed in 1999. Further discussion of this venture and
other  Company  activities  is found in ITEM 2.  Properties,  under the  caption
Present Activity.
                                      
NARRATIVE DESCRIPTION OF BUSINESS

PRINCIPAL PRODUCTS AND MARKETS

The  Company  produces  crude oil and natural  gas.  During the last five years,
revenues from the sales of these  products  have  accounted for more than 90% of
the total revenues of the Company, while remaining revenues have come from other
sources,  including  interest  income on  invested  funds,  partnership  income,
operating  overhead  reimbursements,  and the  sales of  various  developed  and
undeveloped properties.

The majority of the Company's oil production  occurs in Colorado and other Rocky
mountain states, and the Canadian provinces of Alberta and British Columbia. The
Company's  crude oil  production is sold under  short-term  contracts at current
posted  prices  for  each   geographic   area,   less   applicable   quality  or
transportation   tariffs,  plus  negotiated  bonuses.  Prices  are  set  by  oil
purchasers,  and, while their methods of  determining  prices are not within the
control of the Company, it is assumed they are influenced by regional,  national
and  international  factors  relating to oil supply and demand  (see  discussion
under Major Customers).

The bulk of the Company's natural gas production occurs in Wyoming,  California,
the Canadian province of Alberta,  and the Gulf Coast of Texas.  While the areas
where the Company has its major gas reserves are characterized by large reserves
of other companies,  the Company has  historically  been able to sell all of its
productive  capacity,  and  expects to be able to  continue to do so in the near
future.  The majority of gas sold in Wyoming is marketed  under a contract at an
index price that changes monthly. The contract is subject to renegotiation on an
annual  basis.  The majority of gas produced by the Company in other  geographic
areas is sold on the spot market, where prices also vary on a monthly basis.



The Company has not historically hedged significant amounts of either oil or gas
production.

SEASONALITY

The Company experiences some seasonality in gas sales revenues. Net sales prices
and production tend to rise during the winter months compared to the rest of the
year.  However,  since over 65% of the  Company's oil and gas revenues come from
the  sale of oil,  the  seasonal  impact  on  total  oil  and gas  sales  is not
significant.

MAJOR CUSTOMERS

All oil and gas produced in the U.S. or Canada is sold to unaffiliated pipeline,
refining,  or  crude  oil  purchasing  companies.  These  companies  may  be the
operators of the fields where the product is produced,  owners of the  pipelines
which transport the products,  or other  third-party  purchasers.  While certain
entities  purchase  more  than  10% of the  Company's  oil and  gas  production,
previous  changes  in  purchasers  have  not  resulted  in  an  interruption  of
production or  transportation,  and consequently have not had a material adverse
effect on the business of the Company.

COMPETITION

Equity is part of a highly competitive  industry composed of many companies that
are significantly  larger and possess greater resources than the Company.  These
include  major  oil  companies  as well as  large  independent  exploration  and
production  companies.  Their  size and  resources  may allow  these  parties to
operate at a greater competitive advantage than Equity.

During  1998,  the Company did not  experience  any  competitive  factors  which
impaired  its  production  or  sale  of oil  and  gas,  nor  did  it  experience
significant difficulties in contracting for drilling and related equipment.

GOVERNMENT REGULATION

Drilling  activities  of the  Company  are  regulated  by  several  governmental
agencies  in  the  United  States,   both  federal  and  state,   including  the
Environmental  Protection Agency,  Forest Service,  Department of Wildlife,  and
Bureau of Land  Management,  as well as state oil and gas  commissions for those
states in which the Company has operations.  Canadian and Russian operations are
subject to similar requirements.

The Company believes that it is currently in compliance with all federal, state,
and local environmental regulations,  both domestically and abroad. Further, the
Company does not believe that any current environmental  regulations will have a
material impact on its capital expenditures or earnings, nor will they result in
any competitive disadvantage to the Company.
                           
FINANCIAL INFORMATION ABOUT FOREIGN OPERATIONS

Foreign  operations  of the  Company are  currently  conducted  in the  Canadian
provinces  of Alberta and British  Columbia.  Financial  information  concerning
these operations can be found in Footnotes 5 and 9 to the financial  statements.
For financial reporting purposes,  the Company does not allocate any general and
administrative  expenses to its Canadian operations,  nor are they burdened with
indirect exploration overhead expenses.  Direct exploration expenses are charged
to the  geographic  area in  which  they  occur.  Because  the  majority  of the
Company's   exploration   efforts  occur  in  the  United  States,  very  little
exploration  expenses are allocated to the Canadian  operations.  As a result of
these and other  factors,  the  operating  profit of the Canadian  operations is
significantly  greater  than the  operating  profit in the  United  States.  The
Company does not believe that its Canadian operations are attended with any more
risk than those in the United States.

The Company owns a 50% interest in Symskaya Exploration,  Incorporated, which is
licensed to operate in Russia.  Further  discussion  of this venture is found in
ITEM 2. Properties, under the caption Present Activity, and in Footnotes 6 and 9
in the financial statements.

ITEM 2. PROPERTIES

The principal properties of the Company consist of developed and undeveloped oil
and gas leasehold  interests.  Developed leases are comprised of properties with
existing  production,  where lease  terms  continue as long as oil and/or gas is
produced. Undeveloped leases include unproven acreage on both public and private
lands.  The leases have set terms and  terminate  at the time  specified in each
lease unless oil and gas in commercial  quantities are discovered  prior to that
time.

The  Company  also has a fee  interest  in 6,996 net acres of oil shale lands in
Colorado.  These  properties  have not  generated  significant  revenue  for the
Company.  In 1994,  the Company  entered  into a lease  agreement  with  another
company for a five year oil and gas lease on these lands.

<PAGE>

RESERVES

The  information  found in  Footnote 9 to the  financial  statements  concerning
proved  reserves  represents the Company's  best estimate of product  quantities
expected to be produced from the  properties  based on geologic and  engineering
data, as well as current economic and operating conditions.  The presentation is
made in accordance with Securities and Exchange  Commission  guidelines,  and is
based on prices  and costs in effect on  December  31,  1998.  No  estimates  of
reserves  have been filed with or  included  in any report to any other  federal
agency during 1998.

PRODUCTION

The following table sets forth the Company's  production,  average sales prices,
and average lifting costs by geographic area for 1998, 1997, and 1996:
<TABLE>
<CAPTION>

===============================================================================================================================

                             1998             1997             1996             1998            1997            1996
                              Oil              Oil              Oil              Gas             Gas             Gas
Area                        (Bbls)           (Bbls)           (Bbls)           (MMCF)           (MMCF)          (MMCF)
===============================================================================================================================
Production
-------------------------------------------------------------------------------------------------------------------------------
<S>                        <C>              <C>               <C>                 <C>             <C>             <C>
 Colorado                  332,230          366,319           363,080             117             170             106
-------------------------------------------------------------------------------------------------------------------------------
 Texas                      22,291           25,359            29,186             145             211             315
-------------------------------------------------------------------------------------------------------------------------------
 Montana                    20,434           26,103            32,845              34              16              17
-------------------------------------------------------------------------------------------------------------------------------
 Utah                       20,658           18,745            16,769               -               -               -
-------------------------------------------------------------------------------------------------------------------------------
 Wyoming                   131,943           76,190            68,924             733             660             519
-------------------------------------------------------------------------------------------------------------------------------
 North Dakota               67,906            7,007             6,768              31               3               3
-------------------------------------------------------------------------------------------------------------------------------
 Oklahoma                        -              435               607               -               -               -
-------------------------------------------------------------------------------------------------------------------------------
 California                      -                -                 -           1,032             560             365
-------------------------------------------------------------------------------------------------------------------------------
 Other                           5                7                13               -               -               -
-------------------------------------------------------------------------------------------------------------------------------
 Total U.S.                595,467          520,165           518,192           2,092           1,620           1,325
-------------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------------
 Alberta                    75,015           92,376           113,756             277             439             586
-------------------------------------------------------------------------------------------------------------------------------
 B.C.                       21,352           23,371             4,769              69              10               2
-------------------------------------------------------------------------------------------------------------------------------
 Total Canada               96,367          115,747           118,525             346             449             588
-------------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------------
Grand Total                691,834          635,912           636,717           2,438           2,069           1,913
===============================================================================================================================

===============================================================================================================================
Average Price
                                                                                                             
-------------------------------------------------------------------------------------------------------------------------------
  U.S.                     $12.28           $19.49            $21.49           $ 1.95          $2.21           $1.79
-------------------------------------------------------------------------------------------------------------------------------
  Canada                   $11.43           $15.36            $16.99           $ 1.15          $1.34           $1.01
-------------------------------------------------------------------------------------------------------------------------------
  Total                    $12.16           $18.74            $20.65           $ 1.83          $2.02           $1.55
-------------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------------
Lifting Costs
-------------------------------------------------------------------------------------------------------------------------------
  U.S.                     $ 6.11           $ 7.53            $ 7.92           $  .97          $ .85           $ .66
-------------------------------------------------------------------------------------------------------------------------------
  Canada                   $ 4.48           $ 4.15            $ 6.09           $  .40          $ .36           $ .37
-------------------------------------------------------------------------------------------------------------------------------
  Total                    $ 5.88           $ 6.92            $ 7.58           $  .89          $ .75           $ .57
===============================================================================================================================
</TABLE>





                                                      

<PAGE>




PRODUCTIVE WELLS AND ACREAGE

The  location  and  quantity  of  Equity's  productive  wells and  acreage as of
December 31, 1998 are as follows:

==================================================================
 Productive Wells:                       Gross           Net
------------------------------------------------------------------
    Oil:                                             
------------------------------------------------------------------
        United States                      686           88.311
------------------------------------------------------------------
        Canada                             384           11.896
------------------------------------------------------------------
    Gas:                              
------------------------------------------------------------------
        United States                       71           18.872
------------------------------------------------------------------
        Canada                              11            2.209
------------------------------------------------------------------
    Total Productive Wells               1,152          121.288
------------------------------------------------------------------

------------------------------------------------------------------
    Developed Acreage
------------------------------------------------------------------
        United States                  118,128           13,046
------------------------------------------------------------------
        Canada                         127,120            2,946
------------------------------------------------------------------
    Total Developed Acreage            245,248           15,992
==================================================================

UNDEVELOPED LEASEHOLD ACREAGE

The  following  table sets  forth the  Company's  undeveloped  oil and gas lease
acreage as of December 31, 1998 by geographic area:


================================================================================
                                        Gross                      Net
Area                                   Acreage                   Acreage
--------------------------------------------------------------------------------
Colorado                                  23,389                   15,480
--------------------------------------------------------------------------------
Texas                                      2,647                    1,257
--------------------------------------------------------------------------------
Montana                                   31,678                    3,164
--------------------------------------------------------------------------------
Utah                                       7,950                      880
--------------------------------------------------------------------------------
Wyoming                                   52,724                   34,646
--------------------------------------------------------------------------------
California                                32,714                    8,447
--------------------------------------------------------------------------------
North Dakota                              15,105                    8,041
--------------------------------------------------------------------------------
Total U.S.                               166,207                   71,915
--------------------------------------------------------------------------------
Alberta                                   20,697                    3,571
--------------------------------------------------------------------------------
Total Canada                              20,697                    3,571
--------------------------------------------------------------------------------
Grand Total                              186,904                   75,486
================================================================================

Through its 50%  ownership  in  Symskaya,  the Company  also has an indirect 50%
interest in an additional 1,100,000 gross acres in Russia. Further discussion of
this venture is found in ITEM 2. Properties, under the caption Present Activity,
and in Footnotes 6 and 9 to the financial statements.

<PAGE>


DRILLING ACTIVITY

During 1998, the Company participated in the drilling of 12 gross wells. Of this
total,  7 were  completed as producing  oil and gas wells and 5 were plugged and
abandoned as dry holes.


================================================================================
Gross exploratory wells drilled:    Status          1998      1997     1996
--------------------------------------------------------------------------------
     United States                  Productive       6        13       15
--------------------------------------------------------------------------------
                                    Dry              5        12        6
--------------------------------------------------------------------------------
     Canada                         Productive       -         -        -
--------------------------------------------------------------------------------
                                    Dry              -         -        -
--------------------------------------------------------------------------------
Gross development wells drilled:
--------------------------------------------------------------------------------
     United States                  Productive       1         5        3
--------------------------------------------------------------------------------
                                    Dry              -         -        -
--------------------------------------------------------------------------------
     Canada                         Productive       -         -        1
--------------------------------------------------------------------------------
                                    Dry              -         -        -
================================================================================


================================================================================
Net exploratory wells drilled:      Status          1998      1997     1996
--------------------------------------------------------------------------------
     United States                  Productive      2.18      4.21     3.95
--------------------------------------------------------------------------------
                                    Dry             2.10      5.99     1.64
--------------------------------------------------------------------------------
     Canada                         Productive         -         -        -
--------------------------------------------------------------------------------
                                    Dry                -         -        -
--------------------------------------------------------------------------------
Net development wells drilled:
--------------------------------------------------------------------------------
     United States                  Productive      .40       1.74     1.19
--------------------------------------------------------------------------------
                                    Dry                -         -        -
--------------------------------------------------------------------------------
     Canada                         Productive         -         -      .50
--------------------------------------------------------------------------------
                                    Dry                -         -        -
================================================================================



                                        

<PAGE>



PRESENT ACTIVITY

In 1998,  eleven of the  twelve  wells  that the  Company  participated  in were
exploration  wells and one was a development  well. The drilling resulted in the
completion  of six gas wells,  one oil well and five dry holes.  Five of the gas
wells  were  drilled  on 3-D  geophysical  surveys  in the  Sacramento  Basin of
northern  California,  and the oil well was completed in Golden  Valley  County,
North Dakota.  Although  total  drilling  activity  decreased by 60% from the 30
wells drilled in 1997,  the seven wells  completed in 1998 added new reserves of
361,000  barrels  of oil  and 2.5  billion  cubic  feet of gas to the  company's
reserve base, compared to 41,000 barrels and 2.4 billion cubic feet added by the
completion of eighteen wells in 1997.

The projects in the Sacramento Basin are becoming increasingly  important to the
Company.  Gas  production  from the basin now makes up 40% of total  Company gas
production.  The  Company's  drilling  efforts  there are  focused on  prospects
defined by 131 square  miles on nine 3-D seismic  surveys  conducted  during the
last four years.  Including  the 6 wells drilled in 1998, 31 of 49 wells drilled
in the basin have been completed as gas wells; an overall drilling success ratio
of 63%. Equity's working interest in the wells and 3-D surveys ranges from 18.75
to 60%. Gross  production at December 31, 1998 from the wells  completed in 1998
was approximately 13.1 million cubic feet per day, 3.2 million cubic feet net to
Equity.  Of  particular  importance  to  the  Company,  three  of the  1998  gas
completions  are on two 3-D surveys  operated by Equity  where the Company has a
higher  working  interest,  and  further,  these  wells  are  three  of the most
productive wells drilled to date on the Sacramento Basin 3-D surveys.

Two of the Sacramento Basin gas discoveries were on the Company's 16 square mile
Merlin 3-D project.  The initial discovery,  the #1-15 Henning, was completed in
the Forbes formation in February,  and since completion has recorded  cumulative
production  of 607 million  cubic feet of gas and continues to produce at a rate
of 900,000 cubic feet per day. The second well, the Equity #1-22 Otto Lohse,  is
presently  producing at a rate of 300,000 cubic feet per day with cumulative gas
sales to date of 230 million cubic feet. In addition,  a second Forbes reservoir
in this well  drill  stem  tested at a rate of 7.5  million  cubic  feet per day
proving  additional behind pipe reserves.  Equity operates and has a 50% working
interest in the wells and the Merlin survey.  Two additional wells on the Merlin
survey are planned for 1999.

A third gas discovery,  the Equity #1-8 Wescott, was drilled on the Company's 17
square  mile  Davis  Ranch  3-D  survey  in the  Sacramento  Basin.  The well is
presently producing at a rate of 2 million cubic feet per day and has cumulative
gas sales of 481 million cubic feet since August.  Equity operates and maintains
a 60%  working  interest  in the well.  One  additional  well on the Davis Ranch
survey is planned for 1999.

In  addition  to  further  drilling  on Company  operated  3-D  projects  in the
Sacramento Basin in 1999,  Equity expects to participate in additional  drilling
on non-operated projects. At year end 1998, the Company estimates that seven 3-D
surveys  in  which  it  currently  has an  interest  may  contain  as many as 30
prospects that may be drilled over the next several years.

In 1999,  Equity also expects to participate in at least one well on the Sequoia
prospect  in 1999.  Sequoia is a 36 square mile 3-D survey in the  northern  San
Joaquin Basin of California. Seismic processing and interpretation of the survey
data was  completed  early in 1998,  and the  analysis of the data  developed 21
seismic  leads  that may  develop  into  drillable  prospects.  Equity has a 30%
interest in the survey.

Equity  participated  in the drilling of one of the most  prolific  wells in its
history in North Dakota during 1998. The Westport #24- 15 Beaver Creek in Golden
Valley County,  North Dakota,  was initially  completed as a pumping oil well in
the Duperow formation at a rate of 390 barrels per day. After production testing
for one  month,  the  Duperow  producing  zone  was  isolated  and the  well was
recompleted  as a flowing oil well in the Nisku  formation at an initial rate of
1,800  barrels and 1.3  million  cubic feet of gas per day. At year end the well
was still  flowing at a rate of 1,000 barrels and 250,000 cubic feet per day and
had gross cumulative  production of 223,000 barrels and 94 million cubic feet of
gas.  Equity has a 32.5 % working  interest  in the well.  Westport  Oil and Gas
Company operates the well and holds the remaining working interest.  The Company
is presently  evaluating  further  drilling  opportunities  associated  with the
Beaver Creek discovery.

COST CONTROLS

Operating with low oil prices requires  strict  attention to cost control at all
levels in the Company. Equity has been successful in reducing operating costs in
each of the last two years,  and will  endeavor  to make  additional  reductions
during  1999.  In addition,  the Company has taken steps to further  reduce 1999
general and administrative  overhead,  including a freeze on salaries, a 50% cut
in payroll benefits, and staff reductions.

SYMSKAYA EXPLORATION

In 1998,  Symskaya  entered into a Bottom Hole  Contribution  Agreement with the
Committee for Natural  Resources of the  Krasnoyarsk  Krai in Eastern Siberia to
support the drilling of the Averinskaya - 150 well, an exploratory  well that is
being drilled near the town of  Yeniseysk.  The well is adjacent to the southern
block  of  acreage  that  Symskaya  holds  as  part  of  its  1.1  million  acre
exploration,  development and production  license.  The well is being drilled to
evaluate the oil and gas  potential of the same  geologic  section that Symskaya
targeted in the drilling of its Lemok No. 1 well on the northern  acreage  block
of its license area.

In exchange for a nominal payment,  Symskaya will receive all pre- drilling data
from the well,  drilling data acquired  during the drilling of the well, and all
final reports on the well including logs,  test results,  core and drill cutting
samples,  and samples of any oil,  water or gas recovered  during  drilling.  In
addition,  Symskaya personnel will have complete access to the drill site during
drilling,  the right to collect drill cuttings and other samples,  and the right
to witness all coring and testing.  The well,  which is expected to be completed
during 1999, is projected to be drilled to a total depth of 11,500 feet.

Barring major developments from the Averinskaya-150  well and changes in federal
and local  policies  regarding  production  sharing,  further  attempts to drill
Symskaya's  prospect are unlikely,  absent  additional  outside  financing.  The
economy of the Russian  Federation is currently in a period of instability.  The
impact  includes a severe  devaluation of the currency and an increasing rate of
inflation.  The return to economic  stability  is dependent to a large extent on
the  effectiveness  of the fiscal  measures  taken by the  government  and other
actions beyond the Company's  control.  Russia's current  economic  environment,
coupled  with the  depression  in world oil markets,  has made it difficult  for
Symskaya to attract interested parties in their project.

DELIVERY COMMITMENTS

The Company is not  obligated to provide any fixed or  determinable  quantity of
oil or gas in the future under any existing contracts or agreements.

ITEM 3. LEGAL PROCEEDINGS

No material legal proceedings are pending.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

During the fourth quarter of the fiscal year covered by this report,  no matters
were  submitted  to  the  security  holders  for a  vote,  and no  proxies  were
solicited.


                                     PART II

ITEM 5. MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED MATTERS

The Company's stock is traded on the over-the-counter market and quoted over the
NASDAQ National Market System using the symbol EQTY. High and low closing prices
for 1998 and 1997 are as follows:


================================================================================
Quarter                                       High             Low
--------------------------------------------------------------------------------
1998 - 4th                                    1 15/16           21/32
--------------------------------------------------------------------------------
       3rd                                    2 7/16          1 13/16
--------------------------------------------------------------------------------
       2nd                                    2 13/16         2
--------------------------------------------------------------------------------
       1st                                    3 1/16          2 1/2
--------------------------------------------------------------------------------
1997 - 4th                                    3 15/16         2 3/4
--------------------------------------------------------------------------------
       3rd                                    4 1/8           3 3/16
--------------------------------------------------------------------------------
       2nd                                    3 3/8           2 3/4
--------------------------------------------------------------------------------
       1st                                    4 5/16          2 11/16
================================================================================

The approximate number of registered stockholders of the Company as of March 10,
1999 is 1,574.

No  unregistered  equity  securities of the registrant have been sold during the
period covered by this report.


                                        

<PAGE>




ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
<S>                               <C>             <C>             <C>             <C>            <C>     
                                  1998            1997            1996            1995           1994    
---------------------------------------------------------------------------------------------------------
Oil and Gas Sales ........   $ 12,720,876    $ 16,457,048    $ 16,115,125    $ 12,259,739    $ 11,713,498

Other Income .............        377,282       1,023,037         312,759         457,837         196,431

Lease Operating
Costs ....................      6,233,955       5,940,808       5,912,128       5,093,782       4,658,115

DD&A .....................      5,029,119       4,675,411       4,292,237       3,843,442       5,011,155

Impairment of
Proved Oil and
Gas Properties ...........      4,015,158         411,894         237,279       2,471,146             -0-

Equity Loss and Impairment
of Investment in Symskaya
Exploration, Inc. ........        446,758         356,661       9,204,394             -0-             -0-

3-D Seismic ..............        431,075         626,525         757,964         237,604             -0-

Exploration
Expense ..................      2,383,163       3,026,550       2,336,405       1,633,612       1,718,339

General and
Administrative ...........      1,914,590       2,048,194       2,030,811       1,908,778       1,560,675

Loss Before
Cumulative Effect
of Accounting
Changes ..................     (5,814,884)       (211,156)     (5,502,646)     (1,254,812)       (360,830)

Basic Loss Per
Common Share Before
Cumulative Effect of
Accounting Changes .......   $       (.46)   $       (.02)   $       (.43)   $       (.10)   $       (.03)
                             ============    ============    ============    ============    ============

Total Assets .............   $ 47,271,168    $ 53,541,639    $ 50,181,437    $ 53,947,050    $ 51,908,336

Long-Term Debt ...........   $ 16,500,000    $ 13,978,830    $  8,878,830    $  4,918,830    $    460,000

</TABLE>



                                       

<PAGE>



ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

GENERAL.  The  profitability  of the  Company's  operations  in  any  particular
accounting period will be directly related to the average realized prices of oil
and gas sold, the volume of oil and gas produced and the results of acquisition,
development and exploration  activities.  The average realized prices of oil and
gas will  fluctuate  from one period to another  due to market  conditions.  The
aggregate  amount of oil and gas produced may fluctuate based on development and
exploitation  of oil and gas  reserves  and  other  factors.  Production  rates,
value-based  production taxes, labor and maintenance expenses are expected to be
the  principal  influences  on  operating  costs.  Accordingly,  the  results of
operations of the Company may fluctuate from period to period.

OIL AND GAS RESERVES.  During 1998,  crude oil prices  reached 12 year lows, and
remained near those levels for much of the year. Natural gas prices in 1998 were
9% lower than 1997.  This  decrease  in prices had a  significant  effect on the
volumes and values of the Company's  reserves.  Estimates of reserve  quantities
and related future net cash flows are calculated using unescalated  year-end oil
and  gas  prices  and  operating  costs,  and  may  be  subject  to  substantial
fluctuations  based  on the  prices  in  effect  at the  end of each  year.  The
following  table sets forth a  comparison  of year-end  reserves,  the  weighted
average prices used in calculating  estimated reserve  quantities and future net
cash flows,  pre-tax future net cash flows  discounted at 10%, and per barrel of
oil  equivalent  discounted  cash  flows  at the  end of  1998,  1997  and  1996
(quantities  in thousands,  except for pricing and per barrel of oil  equivalent
amounts):
                                                                         SEC-10
                    Year-end                    Year-end       SEC-10    pre-tax
                 proved reserves                 prices        pre-tax   values
                 (MBBLs)  (MMCF)
                   Oil     Gas       BOE*      Oil     Gas     values    per BOE
                   ---     ---       ----      ---     ---     ------    -------
12/31/98          6,193   19,010     9,361    $10.80   $1.95   $25,210    $2.69

12/31/97          8,420   18,909    11,571    $14.99   $2.03   $37,409    $3.23

12/31/96          8,369   17,617    11,305    $24.36   $2.84   $79,002    $7.00

* - gas converted at 6,000 Mcf per barrel.

Reserve  revisions  occur when the economic limit of a property is lengthened or
shortened due to changes in commodity  pricing.  The following  excerpt from the
footnotes to the Company's  financial  statements  shows the effect of depressed
oil prices on the volume of oil reserves (shown in thousands of barrels):
                                                    

                                                  Year ended December 31, 
                                             1998          1997         1996 
                                             ----          ----         ---- 
Proved oil reserves (000's):
Beginning of year                           8,420         8,369        7,750
Revisions of previous estimates            (1,896)         (555)         225
Extensions and discoveries                    361           202           88
Acquisitions of minerals in place               -         1,085          949
Sales of minerals in place                      -           (45)          (6)
Production                                   (692)         (636)        (637)
                                             ----          ----         ---- 
End of year                                 6,193         8,420        8,369
                                            =====         =====        =====

The  negative  revisions  of  1,896,000  and  555,000  barrels in 1998 and 1997,
respectively, are primarily price-related and take into account those properties
where production has been shut-in due to marginal economics.

Excluding  revisions to previous  estimates,  the Company's  drilling program in
1998 added 779,000 barrels of oil equivalent  reserves,  71% of 1998 production.
The Company did not make any producing property acquisitions in 1998. Should oil
and gas prices  remain at their  current  low  levels  for the  balance of 1999,
further reductions in capital spending for 1999 are likely, which may impact the
Company's  ability to replace  production.  The Company  continues to high-grade
both  exploratory  and  development  projects  based on their  assumed risks and
rewards,  balancing this with projects that have specific lease related drilling
commitments.  Other  projects  have been  delayed or  deferred  until oil prices
strengthen and cash flows increase.

1997 drilling and  acquisition  activities in the United States and Canada added
1.72 million  barrels of oil  equivalent to the Company's  proved  reserve base,
replacing  175% of 1997  production.  In 1996,  the Company  added 1.30  million
barrels of oil equivalent, equal to 136% of 1996 oil and gas production. Further
information  concerning the Company's reserve volumes and values can be found in
Footnote 9 to the financial statements.

IMPAIRMENT OF PROVED OIL AND GAS PROPERTIES.  As a result of depressed  year-end
oil prices,  the Company recorded an impairment of proved oil and gas properties
of  $4,015,158  ($2,529,550  net of tax) as of December 31,  1998.  Statement of
Financial  Accounting Standards No. 121 requires successful efforts companies to
evaluate the  recoverability  of the carrying  costs of their proved oil and gas
properties by comparing the expected  undiscounted future net revenues from each
producing  field  with  the  related  net  capitalized  costs at the end of each
period.  When the net  capitalized  costs  exceed  the  undiscounted  future net
revenues,  the cost of the  property  is written  down to fair  value,  which is
determined using discounted future net revenues from the producing field.

During  1998,   the  Company   wrote  down  the  costs  of  several   properties
characterized  by  low-margin  production,  where low oil prices  have  severely
reduced the economic value of their reserves.  During 1997 and 1996, the Company
recorded   proved  property   impairment   charges  of  $411,894  and  $237,279,
respectively.

EQUITY LOSS AND IMPAIRMENT OF INVESTMENT IN SYMSKAYA EXPLORATION,  INCORPORATED.
In 1996,  Symskaya  plugged  and  abandoned  the Lemok #1 well,  and charged the
drilling  costs of the  well to  expense.  Due to the  uncertainty  relating  to
Symskaya's   obtaining   additional   outside   financing  and  proceeding  with
development  of the License  area,  all other  capitalized  costs related to the
Company's  investment  in and  advances  to  Symskaya  were  also  written  off,
resulting in a total charge to expense of $9,204,394. The Company has no current
plans to fund future exploratory  drilling in Russia. The Company's 50% share of
Symskaya's net losses in 1998 and 1997 were $446,758 and $356,661, respectively,
which resulted primarily from administrative  related expenses.  The 1998 amount
includes a write off of  approximately  $125,000 in interest  income on a senior
note between Symskaya and the Company that had been accrued in prior periods, as
well as the Company's share of the bottom hole contribution  discussed  earlier.
Further  discussion  of this venture is found in ITEM 2.  Properties,  under the
caption Present Activity, and in Footnotes 6 and 9 to the financial statements.


RESULTS OF OPERATIONS

COMPARISON OF 1998 WITH 1997

OIL AND GAS PRODUCTION  AND SALES.  Despite record gas production and higher oil
production,  lower oil and gas prices  during 1998 resulted in a 23% drop in oil
and gas sales.  Gas  production of 2.4 Bcf in 1998, the highest level in company
history, was 14% higher than 2.1 Bcf produced in 1997. Oil production of 692,000
barrels was 9% higher than the 636,000 barrels produced in 1997.

Average  oil prices for 1998 were 35% lower  than those of 1997.  The  Company's
average oil price  received  for 1998 was $12.16 per barrel,  compared to $18.74
per  barrel in 1997.  Gas prices  also  dipped by 9%,  averaging  $1.83 in 1998,
compared to $2.02 in 1997.  Further  details of production and pricing are found
in Item 2. Properties, under the caption Production.

OTHER INCOME.  During 1997,  the Company  recorded a gain on the sale of certain
oil and gas properties of approximately  $325,000. In addition, the Company sold
its minority interest in an oil field technology research company. In connection
with the sale, the Company  recognized a gain of approximately  $200,000.  There
were no corresponding events in 1998.

LEASE OPERATING COSTS.  Lease operating costs continued to decline on a per-unit
basis in 1998.  Costs per barrel of oil equivalent  during 1998 of $5.68 were 6%
lower than costs of $6.06 per barrel of oil equivalent  during 1997. During much
of 1998, the Company shut-in several high-cost,  marginally economic wells whose
profitability  was severely  curtailed by low oil prices.  Another factor in the
decline was a reduction in value-based  production taxes. As the majority of the
Company's  production on a barrel of oil equivalent  basis comes from crude oil,
the decline in average oil prices in 1998 brought  about  declines in production
taxes.

In addition, operating costs associated with natural gas properties are lower on
a  barrel  of oil  equivalent  basis  than  for oil  producing  properties.  The
Company's  ratio of gas to oil production  continued to rise in 1998 compared to
prior  years,  and as it did so, per barrel of oil  equivalent  operating  costs
declined.

DEPRECIATION,  DEPLETION, AND AMORTIZATION (DD&A). DD&A charges in 1998 declined
slightly  to $4.58 per  barrel of oil  equivalent  from  $4.77 per barrel of oil
equivalent in 1997.

IMPAIRMENT OF PROVED OIL AND GAS PROPERTIES.  As discussed previously,  included
in the  Statement of Operations  for 1998 and 1997 are non-cash  charges for the
impairment  of proved oil and gas  properties  in the amount of  $4,015,158  and
$411,894, respectively.

EQUITY LOSS AND IMPAIRMENT OF INVESTMENT IN SYMSKAYA EXPLORATION,  INCORPORATED.
The  Company  is  continuing  to pursue  additional  outside  financing  for its
Symskaya  project in Russia.  The Company  announced  in 1998 that its 50% owned
subsidiary,  Symskaya, entered  into a bottom  hole  contribution  agreement  to
support  the  drilling of an  exploratory  well that is being  drilled  near the
southern  block of acreage that  Symskaya  holds as part of its 1.1 million acre
exploration, development and production License.

The equity loss in Symskaya increased by approximately $90,000 during 1998. This
increase  included a write down of  approximately  $125,000 of accrued  interest
income  on a  senior  note  between  Symskaya  and the  Company  that  had  been
recognized  in prior  periods.  In  addition,  the 1998  increase  includes  the
Company's  share of the bottom hole  contribution.  There were no  corresponding
events in 1997.

3-D SEISMIC AND EXPLORATION EXPENSES. During 1998, the Company incurred $431,075
in 3-D seismic costs related to its exploration  programs,  compared to $626,525
in 1997. The bulk of 1998 3-D costs were  associated with its Sequoia project in
the San  Joaquin  Basin of  California.  The  initial  well at Sequoia  has been
delayed  until the first half of 1999.  Exploration  expenses  decreased  as the
Company  drilled 5  exploratory  dry holes in 1998,  compared to 12 dry holes in
1997.  Successful efforts accounting,  the method used by the Company,  requires
both 3-D seismic costs and  exploratory  dry hole costs to be charged to expense
on a current basis.

INTEREST  AND INCOME  TAXES.  Higher  interest  costs in 1998 reflect the higher
amount of debt outstanding  under the Company's credit facility.  The income tax
benefits  recorded  for both  periods  result  primarily  from the  deferred tax
benefits associated with net losses reported.  Details concerning the components
of the tax provision can be found in Footnote 3 to the financial statements.

COMPARISON OF 1997 WITH 1996

OIL AND GAS  PRODUCTION  AND SALES.  The Company's 1997 increases in oil and gas
and sales were due largely to  increases in natural gas  production  and prices.
During 1997, the Company's gas production  increased 8%, from 1.9 Bcf in 1996 to
2.1 Bcf in 1997.  Average  prices of $2.02 per Mcf in 1997 were 30% higher  than
the $1.55  received  in 1996.  The  increase  in gas  production  reflected  the
contribution  from  the  Company's   exploration  and  development  programs  in
California and Wyoming.

Offsetting  the increases in gas  production  and pricing,  oil  production  was
essentially  flat from year to year,  with  636,000  barrels  produced  in 1997,
compared to 637,000 barrels in 1996. While 1997 year-end oil prices  experienced
a sharp  decline  from the prior year,  the decline in average  prices  received
throughout  the year was somewhat  milder.  Average  prices of $18.74 per barrel
were 10% lower than the $20.65 per barrel  received in 1996.  Further details of
production  and  pricing  are found in Item 2.  Properties,  under  the  caption
Production.

OTHER INCOME.  During the first half of 1997, the Company recorded a gain on the
sale of certain oil and gas properties of approximately $325,000. The properties
sold had reserves of less than 15,000 barrels of oil. There was no corresponding
event in 1996. In addition,  during the third quarter of 1997,  the Company sold
its minority interest in an oil field technology research company. In connection
with the sale, the Company  recognized a gain of approximately  $200,000.  These
two transactions combined to increase other income by 227% over 1996 levels.

LEASE  OPERATING  COSTS.  Despite a higher number of wells on production  during
1997 as compared to 1996,  lease  operating  costs declined on a per-unit basis.
The primary  factor in the decline was a  reduction  in  value-based  production
taxes. As the majority of the Company's production on a barrel of oil equivalent
basis comes from crude oil,  the  decline in average oil prices in 1997  brought
about a similar decline in production taxes.

In addition,  operating costs  associated with natural gas properties were lower
on a barrel of oil  equivalent  basis  than for oil  producing  properties.  The
Company's  ratio of gas to oil  production  continued to rise in 1997, and as it
did so, per barrel of oil equivalent costs declined.

DEPRECIATION, DEPLETION, AND AMORTIZATION (DD&A). Increased DD&A charges in 1997
were a direct  reflection  of lower  year-end  oil  prices  used in  calculating
reserves.  Generally speaking, as oil prices decline, economic oil reserves also
decline. As these reserves decline,  extraction percentages increase,  resulting
in higher DD&A charges.

IMPAIRMENT OF PROVED OIL AND GAS PROPERTIES.  As discussed previously,  included
in the  Statement of Operations  for 1997 and 1996 are non-cash  charges for the
impairment  of proved  oil and gas  properties  in the  amount of  $411,894  and
$237,239, respectively.

EQUITY LOSS AND IMPAIRMENT OF INVESTMENT IN SYMSKAYA EXPLORATION,  INCORPORATED.
As discussed  above, in 1996,  Symskaya plugged and abandoned the Lemok #1 well,
and charged the drilling  costs of the well to expense.  Due to the  uncertainty
relating to Symskaya's  obtaining  additional  outside  financing and proceeding
with development of the License area, all other capitalized costs related to the
Company's  investment  in and  advances  to  Symskaya  were  also  written  off,
resulting in a total charge to expense in 1996 of $9,204,394  ($6,592,206  after
tax). The Company's 50% share of Symskaya's net loss in 1997 was $356,661, which
resulted primarily from administrative related expenses.

3-D SEISMIC AND EXPLORATION EXPENSES. During 1997, the Company incurred $626,525
in 3-D seismic costs related to its exploration  programs,  compared to $757,964
in 1996.  Exploration  expenses  increased as the Company drilled 12 exploratory
dry  holes  in  1997,  compared  to 6 dry  holes  in  1996.  Successful  efforts
accounting,  the method used by the Company, requires both 3-D seismic costs and
exploratory dry hole costs to be charged to expense on a current basis.

GENERAL  AND  ADMINISTRATIVE   EXPENSES.   The  Company  recorded  increases  in
compensation expense, along with small increases in other administrative charges
during 1997.

INTEREST EXPENSE.  During 1996,  because of its ongoing  exploration  project in
Russia,  the Company was  required to  capitalize  all  interest  expense.  With
activity in Russia  curtailed in 1997,  interest  was charged to expense.  Along
with increased borrowing on the Company's revolving credit facility, this caused
interest expense to increase during 1997 over 1996 levels.

INCOME TAXES. Income tax expense for 1997 includes additional taxes arising from
an audit of the Company's Canadian tax returns.  The adjustment  resulted in the
accrual of approximately  $175,000 in additional Canadian taxes related to prior
years.  The income tax benefit in 1996 resulted  primarily from the deferred tax
benefit associated with the net loss reported. Details concerning the components
of the tax expense can be found in Footnote 3 to the financial statements.

LIQUIDITY AND CAPITAL RESOURCES

CASH AND WORKING  CAPITAL.  Total cash  balances  increased  17% from 1997, as a
result of a combination of several events discussed in the following paragraphs.
Working  capital  decreased by 39%  primarily  due to lower  accrued oil and gas
sales. The Company's ratio of current assets to current  liabilities was 1.76 to
1 at December 31, 1998, compared to 2.33 to 1 at December 31, 1997.

CASH FLOWS FROM  OPERATING  ACTIVITIES.  Cash  flows from  operating  activities
declined  54% in 1998  compared to 1997  levels,  primarily as a result of lower
revenues  caused by  depressed  oil and gas prices.  Despite  higher oil and gas
production in 1998,  oil and gas sales dropped by $3.7 million.  1997 cash flows
decreased  from 1996  levels  as a result of a  reduction  in  accounts  payable
balances, which is mainly a function of timing.

CASH FLOWS FROM  INVESTING  ACTIVITIES.  Capital  expenditures  in 1998 were 57%
lower than in 1997. Excluding 1997 property  acquisitions,  expenditures in 1998
were down 21%. This decrease in capital spending is a direct result of decreased
revenues  resulting  from lower oil and gas prices.  Should oil prices remain at
their current low levels for the balance of 1999,  the Company  expects  further
reductions  in capital  spending for 1999.  The Company  continues to high-grade
both  exploratory  and  development  projects  based on their  assumed risks and
rewards,  balancing this with projects that have specific lease related drilling
commitments.  Other  projects  have been  delayed or  deferred  until oil prices
strengthen and cash flows increase.

Capital  expenditures  in 1997 were 30% higher than the amount recorded in 1996.
Included in the 1997 figures were $3.2 million  associated  with proved property
acquisitions,  and $1.2 million associated with unproved property  acquisitions.
During 1996, the Company incurred $2 million and $.5 million,  respectively, for
these property acquisitions.

Subsequent to the plugging of the Lemok #1 in 1996,  the  Company's  advances to
Symskaya  Exploration,  Inc. decreased  significantly.  During 1998 and 1997 the
Company advanced approximately $319,000 and $357,000 to Symskaya,  respectively,
compared  to  approximately  $3.0  million in 1996.  The  Company  expects  that
advances to Symskaya in 1999 will again be minimal as the Company has no current
plans to fund any  exploratory  drilling in Russia.  The equity loss in Symskaya
Exploration for 1998 includes a writedown of approximately  $125,000 in interest
income on a senior note  between  Symskaya and the Company that had been accrued
in prior periods. In addition, the 1998 amount included the Company's share of a
bottom  hole  contribution  discussed  earlier.  Neither of these two events are
recurring.

CASH FLOWS FROM FINANCING  ACTIVITIES.  The Company used proceeds of $2,521,170,
$5,100,000  and  $3,960,000  in  1998,  1997  and  1996  respectively,  from its
Revolving Credit Facility to fund capital expenditures.

The Company purchased 135,600 shares of its stock on the open market during 1997
at an average price of $3.17 per share.  The  purchases  were made pursuant to a
share  repurchase  program  adopted by the Company in June of 1997.  No treasury
stock was  purchased  during 1998.  The Company  purchased  29,000 shares of its
stock during 1996 at an average price of $3.40 per share.

CREDIT FACILITY.  In March of 1995, the Company obtained a $20 million Borrowing
Base Credit Facility (the Facility).  On March 30, 1998, the Company amended its
credit  agreement,  setting the  current  commitment  under the  Facility at $18
million.  In  addition,  on June 24, 1998,  the Facility was further  amended in
order to set the first principal payment date to July 1, 2001 from July 1, 1999.

The Company's  commitment under the Facility is subject to a redetermination  as
of July 1 and  January 1 of each year,  with  reserve  values  calculated  using
estimated future prices determined by the Company's lender.  Using a reduced oil
price deck, brought about by continued low oil prices,  the Company's  borrowing
base was lowered to $17 million after the July 1, 1998 redetermination,  and the
Company was  notified to this effect in  September  of 1998.  As of December 31,
1998 the outstanding  balance under the Facility was $16.5 million at an average
interest  rate of  7.26%.  Accordingly,  at the end of  1998,  the  Company  had
approximately $500,000 of remaining availability on the Facility.

Primarily  as a result  of the $4  million  property  impairment  charge,  as of
December  31, 1998 the  Company was in  violation  of the  "Tangible  Net Worth"
covenant  contained in the Facility.  In March 1999,  the Company's bank amended
the Facility to remedy the covenant violation.  The Company is now in compliance
with all covenants in the Facility.

The Company  believes  that existing cash  balances,  cash flows from  operating
activities, and funds available under the Company's credit facility will provide
adequate  resources to fund  on-going  operations  and will allow the Company to
meet limited capital and exploration spending objectives for 1999. The Company's
drilling plans for 1999 have been significantly curtailed due to low oil prices.
The  ability of the  Company  to replace  its 1999  production  volumes  through
drilling with curtailed  budgets may be significantly  impaired.  Should the low
oil price  environment  continue for an extended period of time, the Company may
have  difficulty in meeting its ongoing  exploration  and  development  drilling
objectives.  The Company has adequate  liquidity to maintain its  operations  as
they currently exist.

COMMITMENTS.  Under the  terms of  Symskaya's  License  and  Production  Sharing
Contract (PSC), Equity was committed to advance Symskaya a minimum of $6 million
during the first 5 contract years,  representing 50% of the minimum expenditures
called for in the License and PSC, with the  remainder  being funded by Leucadia
National Corporation,  Symskaya's other 50% shareholder. The first contract year
began November 15, 1993. The amounts spent through November 14, 1998, the end of
the fifth  contract  year,  have  satisfied  all minimum  commitments  required.
Further  discussion  of this venture is found in ITEM 2.  Properties,  under the
caption Present Activity, and in Footnotes 6 and 9 to the financial statements.

OTHER ITEMS. The Company has reviewed all recently issued,  but not yet adopted,
accounting standards in order to determine their effects, if any, on the results
of operations or financial  position of the Company.  Based on that review,  the
Company  believes that none of these  pronouncements  will have any  significant
effects on current or future earnings or operations.

YEAR 2000

In 1998,  the Company  began a project to ensure that its computer  systems were
year 2000 compliant.  The Company  identified this project as a priority and has
allocated  personnel and financial  resources to it in an effort to minimize the
impact of year  2000  date  related  problems.  An  officer  of the  Company  is
supervising  the  project.  In addition,  the Company is  conducting a year 2000
compliance  assessment of those of its vendors and customers whose relationship,
in  the  Company's  business  judgment,  is  material.  Although  the  Company's
assessment  of its year 2000  issues is not  complete,  the  Company  has made a
preliminary  determination  of  its  mission-critical  and  non-mission-critical
items.


The  Company's   mission-critical   items  include  its  financial   accounting,
engineering,  and  lease/land  software.  Each of these  items has  either  been
certified by the vendor as year 2000 compliant, or the vendor has certified that
a compliant  version of the software will be in place before June 30, 1999.  All
non-  mission-critical  systems  have been  certified  as being  compliant.  The
Company is conducting tests to support these claims.

The Company does not anticipate incurring any significant expense to ensure year
2000 compliance.  Although the Company is undertaking this project, no assurance
can be given  that  such a program  will be able to solve  the year 2000  issues
applicable  to the  Company  or that  failure  to solve will not have a material
adverse effect on the Company.

FORWARD LOOKING STATEMENTS

The preceding  discussion and analysis  should be read in  conjunction  with the
consolidated  financial  statements,  including  the  notes  thereto,  appearing
elsewhere  in  this  annual  report  on Form  10-K.  Except  for the  historical
information  contained  herein,  the matters  discussed  in this  annual  report
contain  forward-looking  statements  within the  meaning of section  27a of the
securities act of 1933, as amended,  and section 21e of the securities  exchange
act of 1934, as amended, that are based on management's beliefs and assumptions,
current  expectations,  estimates,  and  projections.  Statements  that  are not
historical facts, including without limitation statements which are preceded by,
followed by or include the words "believes,"  "anticipates," "plans," "expects,"
"may," "should" or similar expressions are forward-looking  statements.  Many of
the factors that will  determine  the  Company's  future  results are beyond the
ability of the Company to control or predict.  These  statements  are subject to
risks and uncertainties  and,  therefore,  actual results may differ materially.
The Company  disclaims any obligation to update any  forward-looking  statements
whether as a result of new information, future events or otherwise.

Important  factors that may effect future results  include,  but are not limited
to: the risk of a significant natural disaster,  the inability of the Company to
insure against  certain risks,  fluctuations in commodity  prices,  the inherent
limitations in the ability to estimate oil and gas reserves, changing government
regulations, as well as general market conditions,  competition and pricing, and
other risks  detailed from time to time in the Company's SEC reports,  copies of
which  are  available  upon  request  from  the  Company's   investor  relations
department.


ITEM 7(a). QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The answers to items listed under Item 7(a) are inapplicable or negative.


                                       

<PAGE>



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                        Report of Independent Accountants

To the Stockholders and Board of
Directors of Equity Oil Company:

In our opinion,  the financial  statements as listed in Item 14 (a) of this Form
10-K, present fairly, in all material respects, the financial position of Equity
Oil Company (the  "Company")  at December 31, 1998 and 1997,  and the results of
its  operations  and its cash  flows for each of the three  years in the  period
ended  December 31, 1998,  in  conformity  with  generally  accepted  accounting
principles.  These financial  statements are the responsibility of the Company's
management;  our  responsibility  is to express  an  opinion on these  financial
statements  based on our audits.  We conducted our audits of these statements in
accordance with generally accepted auditing standards which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements,  assessing the accounting  principles used and significant estimates
made by management and evaluating the overall financial statement  presentation.
We believe that our audits provide a reasonable basis for the opinion  expressed
above.
                                    PricewaterhouseCoopers LLP

                                    Salt Lake City, Utah
                                    March 10, 1999

                                       

<PAGE>


<TABLE>
<CAPTION>

                               EQUITY OIL COMPANY
                                 BALANCE SHEETS
                           December 31, 1998 and 1997



        ASSETS                                                                 1998             1997

Current assets:
<S>                                                                     <C>              <C>          
  Cash and cash equivalents .........................................   $     444,476    $     378,801
  Accounts receivable ...............................................       1,933,686        2,957,677
  Operator advances .................................................         762,474          683,858
  Federal, state and foreign income
     taxes receivable ...............................................         291,597           88,174
  Deferred income taxes .............................................          19,417           18,934
  Other current assets ..............................................         318,904          514,713
                                                                        -------------    -------------
           Total current assets .....................................       3,770,554        4,642,157
                                                                        -------------    -------------
Property and equipment, at cost (successful efforts method):
  Unproved oil and gas properties ...................................       3,003,223        3,504,362
   Proved oil and gas properties:
     Developed leaseholds ...........................................       9,994,273       13,049,597
     Intangible drilling costs ......................................      64,845,202       68,324,359
     Equipment ......................................................      25,731,345       27,733,805
   Other property and equipment .....................................         833,772          759,768
                                                                        -------------    -------------
                                                                          104,407,815      113,371,891
        Less accumulated depreciation,
           depletion and amortization ...............................     (61,191,368)     (64,846,514)
                                                                        -------------    -------------
                                                                           43,216,447       48,525,377
                                                                        -------------    -------------
Other assets:
  Investment in Raven Ridge Pipeline
     Partnership ....................................................         220,997          268,821
  Other assets ......................................................          63,170          105,284
                                                                        -------------    -------------
                                                                              284,167          374,105
                                                                        -------------    -------------

           Total assets .............................................   $  47,271,168    $  53,541,639
                                                                        =============    =============

 LIABILITIES AND STOCKHOLDERS' EQUITY                                          1998             1997
                                                                        
Current liabilities:
  Accounts payable ..................................................     $ 1,675,758    $   1,327,120
  Accrued liabilities ...............................................         164,163          120,039
  Federal, state and foreign income
     taxes payable ..................................................         212,583          354,002
  Accrued profit-sharing contribution ...............................          90,413          188,973
                                                                        -------------    -------------
           Total current liabilities ................................       2,142,917        1,990,134
                                                                        -------------    -------------


Revolving credit facility ...........................................      16,500,000       13,978,830
Deferred income taxes ...............................................       1,642,700        4,851,966
                                                                        -------------    -------------
                                                                           18,142,700       18,830,796
                                                                      -------------    -------------
Commitments (Note 6)

Stockholders' equity:
  Common stock, $1 par value:
     Authorized:  25,000,000 shares
     Issued:  12,794,040 shares in 1998
        and 12,761,100 shares in 1997 ...............................      12,794,040       12,761,100
  Paid in capital ...................................................       3,714,493        3,667,707
  Retained earnings .................................................      11,005,320       16,820,204
                                                                        -------------    -------------
                                                                           27,513,853       33,249,011

  Less treasury stock, at cost ......................................        (528,302)        (528,302)
                                                                        -------------    -------------
                                                                           26,985,551       32,720,709
                                                                        -------------    -------------
        Total liabilities and
           stockholders' equity .....................................   $  47,271,168    $  53,541,639
                                                                        =============    =============
</TABLE>

<PAGE>

                               EQUITY OIL COMPANY
                            STATEMENTS OF OPERATIONS
              for the years ended December 31, 1998, 1997 and 1996

<TABLE>
<CAPTION>

                                                    1998            1997            1996
                                                    ----            ----            ----
Revenues:
<S>                                            <C>             <C>             <C>         
 Oil and gas sales .........................   $ 12,720,876    $ 16,457,048    $ 16,115,125
 Partnership income ........................         19,334         311,215         306,114
 Interest ..................................         60,491         153,672         140,053
 Other income ..............................        377,282       1,023,037         312,759
                                               ------------    ------------    ------------
                                                 13,177,983      17,944,972      16,874,051
                                               ------------    ------------    ------------

Expenses:
 Oil and gas leasehold operating costs .....      6,233,955       5,940,808       5,912,128
 Depreciation, depletion and amortization ..      5,029,119       4,675,411       4,292,237
 Impairment of proved oil and gas properties      4,015,158         411,894         237,279
 Equity loss and impairment of investment
    in Symskaya Exploration, Inc ...........        446,758         356,661       9,204,394
 Leasehold abandonments ....................        162,754          86,542          87,464
 3-D seismic ...............................        431,075         626,525         757,964
 Exploration ...............................      2,383,163       3,026,550       2,336,405
 General and administrative ................      1,914,590       2,048,194       2,030,811
 Interest, net of interest capitalized
    of $364,637 in 1996 ....................      1,298,061         733,980         164,678
                                               ------------    ------------    ------------
                                                 21,914,633      17,906,565      25,023,360
                                               ------------    ------------    ------------

      Income (loss) before income taxes ....     (8,736,650)         38,407      (8,149,309)

Provision for (benefit from) income taxes ..     (2,921,766)        249,563      (2,646,663)
                                               ------------    ------------    ------------

      Net loss .............................   $ (5,814,884)   $   (211,156)   $ (5,502,646)
                                               ============    ============    ============

Basic and diluted net loss per common share    $       (.46)   $       (.02)   $       (.43)
                                               ============    ============    ============

Basic and diluted weighted
   average shares outstanding ..............     12,623,041      12,686,211      12,733,864
                                               ============    ============    ============
</TABLE>

     The accompanying notes are an integral part of the financial statements

                                       

<PAGE>


                               EQUITY OIL COMPANY

                            STATEMENTS OF CHANGES IN
                    STOCKHOLDERS' EQUITY for the years ended
                        December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>


                                                            Common Stock          Paid in   Retained        Treasury Stock          
                                                         Shares       Amount      Capital   Earnings      Shares         Cost      
                                                         ------       ------      -------   --------      ------         ----      
<S>                                                    <C>         <C>           <C>         <C>                         <C>     
   Balance at January 1, 1996                          12,711,100  $12,711,100   $3,485,487  $22,534,006           -     $      -

   Net loss                                                                                   (5,502,646)
   Treasury stock purchased, $3.40 per share                                                                  29,000      (98,653)
   Common stock issued for services, $5.04 per share       20,500       20,500       82,813
   Common stock issued on exercise of
      incentive stock options                              19,500       19,500       64,875
   Income tax benefit from exercise of
      incentive stock options                                                        15,158                                  
                                                       ----------   ----------    ---------   ----------    --------     --------

   Balance at December 31, 1996                        12,751,100   12,751,100    3,648,333   17,031,360      29,000      (98,653)

   Net loss                                                                                     (211,156)
   Treasury stock purchased, $3.17 per share                                                                 135,600     (429,649)
   Common stock issued for services, $2.94 per share       10,000       10,000       19,374                                     
                                                       ----------   ----------    ---------   ----------    --------     --------

   Balance at December 31, 1997                        12,761,100   12,761,100    3,667,707   16,820,204     164,600     (528,302)
   Net loss                                                                                   (5,814,884)
   Common stock issued for services, $2.42 per share       32,940       32,940       46,786                                      
                                                       ----------   ----------    ---------   ----------    --------     --------

   Balance at December 31, 1998                        12,794,040  $12,794,040   $3,714,493  $11,005,320     164,600    $(528,302)
                                                       ==========   ==========    =========   ==========     =======     ========

</TABLE>

<PAGE>
<TABLE>
<CAPTION>


                               EQUITY OIL COMPANY
                            STATEMENTS OF CASH FLOWS
              for the years ended December 31, 1998, 1997 and 1996

                                                                                     1998            1997          1996
                                                                                     ----            ----          ----
Cash flows from operating activities:
<S>                                                                              <C>            <C>            <C>         
 Net loss ....................................................................   $(5,814,884)   $  (211,156)   $(5,502,646)
 Adjustments to reconcile net loss
   to net cash provided by operating activities:
     Impairment of proved oil and gas properties .............................     4,015,158        411,894        237,279
     Equity loss and impairment of investment
       in Symskaya Exploration, Inc. .........................................       446,758        356,661      9,204,394
     Depreciation, depletion and amortization ................................     5,029,119      4,675,411      4,292,237
     Partnership distributions in excess of income ...........................        47,824        136,508        134,892
     (Gain) loss on property dispositions ....................................       325,558       (243,423)        87,464
     Change in other assets ..................................................        42,114         42,114         42,113
     Deferred income tax benefit .............................................    (3,209,749)      (701,888)    (3,130,574)
     Common stock issued for services ........................................        79,726         29,374        103,313
                                                                                 -----------    -----------    -----------
                                                                                     961,624      4,495,495      5,468,472
     Increase (decrease) from changes in:
       Accounts receivable and operator advances .............................       817,827         19,135       (406,805)
       Other current assets ..................................................       195,809       (142,012)         5,893
       Accounts payable and accrued liabilities ..............................       294,202       (576,853)       735,915
       Income taxes payable/receivable .......................................      (344,842)       385,712          4,511
                                                                                 -----------    -----------    -----------
          Net cash provided by operating activities ..........................     1,924,620      4,181,477      5,807,986
                                                                                 -----------    -----------    -----------

Cash flows from investing activities:
 Sale of temporary cash investments ..........................................          --           49,802        906,165
 Advances to Symskaya Exploration, Inc. ......................................      (319,210)      (356,661)    (3,043,952)
 Capital expenditures ........................................................    (4,126,630)    (9,547,036)    (7,339,212)
 Proceeds from sale of oil and gas properties ................................        65,725        592,907           --
                                                                                 -----------    -----------    -----------
          Net cash used in investing activities ..............................    (4,380,115)    (9,260,988)    (9,476,999)
                                                                                 -----------    -----------    -----------
Cash flows from financing activities:
 Exercise of incentive stock options .........................................          --             --           84,375
 Purchase of treasury stock ..................................................          --         (429,649)       (98,653)
 Borrowings under revolving credit facility ..................................     2,521,170      5,100,000      3,960,000
                                                                                 -----------    -----------    -----------
          Net cash provided by financing activities ..........................     2,521,170      4,670,351      3,945,722
                                                                                 -----------    -----------    -----------
Net (decrease) increase in cash and cash equivalents .........................        65,675       (409,160)       276,709
Cash and cash equivalents at beginning of year ...............................       378,801        787,961        511,252
                                                                                 -----------    -----------    -----------
Cash and cash equivalents at end of year .....................................   $   444,476    $   378,801    $   787,961
                                                                                 ===========    ===========    ===========


  Supplemental disclosures of cash flow information: Cash paid during the year
  for:
   Income taxes ..............................................................   $   495,882    $   701,694    $   419,121
   Interest ..................................................................   $ 1,298,061    $   733,980    $   164,678

</TABLE>

     The accompanying notes are an integral part of the financial statements

                                       

<PAGE>


                               EQUITY OIL COMPANY

                          NOTES TO FINANCIAL STATEMENTS


1.       Significant Accounting Policies:

         A.    The Company:

               Equity  Oil  Company  (the  Company)  is a  Colorado  corporation
               engaged in oil and gas exploration, development and production in
               the United States, Canada and Russia.

         B.    Cash and Cash Equivalents:

               The  Company   considers  all  highly  liquid  debt   instruments
               purchased with an original maturity of three months or less to be
               cash equivalents.

         C.    Accounting for Oil and Gas Operations:

               The Company  reports  using the  "successful  efforts"  method of
               accounting  for oil and gas  operations.  The use of this  method
               results in  capitalization  of those  costs  identified  with the
               acquisition,  exploration  and  development  of  properties  that
               produce revenue or, if in the development  stage, are anticipated
               to produce  future  revenue.  Costs of  unsuccessful  exploration
               efforts are expensed in the period in which it is determined that
               such  costs  are  not   recoverable   through  future   revenues.
               Exploratory  geological  and  geophysical  costs are  expensed as
               incurred.  The costs of development wells are capitalized whether
               productive or nonproductive.

               The Company annually assesses  undeveloped oil and gas properties
               for impairment.  Any impairment recorded represents  management's
               estimate of the decline in realizable  value  experienced  during
               the  year.  The  costs  of  proved  properties  which  management
               determines are not recoverable are written off in the period such
               determination  is made. The net  capitalized  costs of proved oil
               and gas properties are measured for impairment in accordance with
               SFAS No. 121 (see Note 2).

               The provision for  depreciation,  depletion and  amortization  of
               proved  oil and gas  properties  is  computed  using  the unit of
               production  method,   based  on  proved  oil  and  gas  reserves.
               Estimated  dismantlement,  restoration and abandonment  costs are
               expected to be offset by estimated  residual  values of lease and
               well  equipment.  Thus,  no  accrual  for  such  costs  has  been
               recorded.

         D.    Concentration of Credit Risk:

               Substantially all of the Company's accounts receivable are within
               the oil and gas industry,  primarily  from  purchasers of oil and
               gas (see Note 5).  Although  diversified  within many  companies,
               collectibility is dependent upon the general economic  conditions
               of the industry.  The receivables are not collateralized  and, to
               date, the Company has experienced minimal bad debts. The majority
               of the  Company's  cash  and  cash  equivalents  is held by three
               financial  institutions  located in Salt Lake City,  Utah, and by
               one financial institution in Calgary, Alberta.

         E.    Equipment:

               The provision for  depreciation of equipment  (other than oil and
               gas equipment) is based on the  straight-line  method using asset
               lives as follows:

                            Office equipment              10 years
                            Automobiles                    3 years

               When equipment is retired or otherwise  disposed of, the cost and
               accumulated  depreciation  are removed  from the accounts and any
               resulting   gain  or  loss  is  included  in  the  Statements  of
               Operations.

         F.    Foreign Operations:

               Operations and  investments in Canada have been  translated  into
               U.S. dollar equivalents at the average rate of exchange in effect
               at the transaction date.  Foreign exchange gains or losses during
               1998, 1997 and 1996 were not material.

                                    Continued
                                                   
                                       

<PAGE>


                               EQUITY OIL COMPANY

                    NOTES TO FINANCIAL STATEMENTS, Continued



1.       Significant Accounting Policies, Continued:

         G.    Loss Per Common Share:

               Basic  earnings per share is computed by dividing the net loss by
               the weighted average number of common shares outstanding. Diluted
               earnings  per share is computed  by dividing  the net loss by the
               sum of the  weighted  average  number  of common  shares  and the
               effect of dilutive unexercised stock options. Options to purchase
               1,203,000,  1,141,000  and  1,076,000  shares of common  stock at
               prices ranging from $2.50 to $6.00 per share were  outstanding at
               December  31,  1998,  1997 and 1996,  respectively,  but were not
               included in the computation of diluted earnings per share because
               the effect would have been antidilutive.

         H.    Estimates:

               The  preparation  of  financial  statements  in  conformity  with
               generally accepted  accounting  principles requires management to
               make estimates and assumptions  that affect the reported  amounts
               of assets and liabilities and disclosure of contingent assets and
               liabilities  at the  date  of the  financial  statements  and the
               reported  amounts of revenues and expenses  during the  reporting
               period. Actual results could differ from those estimates.

               Significant  estimates with regard to these financial  statements
               include the  estimate  of proved oil and gas reserve  volumes and
               the estimated future development,  dismantlement, and abandonment
               costs used in determining amortization provisions.

2.       Impairment of Proved Oil and Gas Properties:

         SFAS No.121, Accounting for the Impairment of Long Lived Assets and for
         Assets Held for  Disposal,  requires  successful  efforts  companies to
         evaluate  the  recoverability  of the net  capitalized  costs  of their
         proved  oil and  gas  properties  at a field  level.  The  SFAS No. 121
         impairment test compares the expected  undiscounted future net revenues
         from each producing field with the related net capitalized costs at the
         end  of  each  period.  When  the  net  capitalized  costs  exceed  the
         undiscounted future net revenues, the carrying value of the property is
         written down to fair value, which is determined using discounted future
         net revenues from the producing field.

         The   Company  recorded   non-cash  impairment  charges  of $4,015,158,
         $411,894 and $237,279 for 1998, 1997 and 1996, respectively.

                                    Continued

                                       

<PAGE>


                               EQUITY OIL COMPANY

                    NOTES TO FINANCIAL STATEMENTS, Continued



3.       Income Taxes:

         The Company  accounts for income taxes in accordance with SFAS No. 109.
         Deferred  income  taxes are  provided  using  enacted  tax rates on the
         difference  between  the tax  basis of an asset  or  liability  and its
         reported amount in the financial statements that will result in taxable
         or deductible  amounts in future years when the reported  amount of the
         asset or liability is recovered or settled, respectively.

         The  provision  for  (benefit   from)  income  taxes  consists  of  the
         following:

<TABLE>
<CAPTION>

                                                1998           1997           1996
                                                ----           ----           ----
         Currently payable (receivable):
           U.S. income taxes (including
<S>                                        <C>            <C>            <C>        
              alternative minimum tax) .   $      --      $    18,584    $   185,082
           State income taxes ..........         6,500         70,512        108,463
           Canadian income taxes .......       208,046        471,064        190,366
           Prior years taxes ...........        73,437        391,291           --
           Deferred tax benefit ........    (3,209,749)      (701,888)    (3,130,574)
                                           -----------    -----------    -----------

                                           $(2,921,766)   $   249,563    $(2,646,663)
                                           ===========    ===========    ===========

</TABLE>

         The  components  of the net deferred  tax  liability as of December 31,
         1998 and 1997 were as follows:

                                                  1998           1997
                                                  ----           ----

Deferred tax assets:
  AMT credit carryforward ................   $   311,931    $   293,789
  State income taxes .....................         2,403         26,068
  Deferred compensation ..................        17,014         13,370
  Geological and geophysical costs .......       645,680        637,371
  Accrued interest .......................       660,319        433,750
  Foreign tax credit carryforward ........       699,908        501,257
  Statutory depletion carryforward .......        82,287           --
  Equity loss and impairment of investment
    in Symskaya Exploration, Inc .........     2,781,918      2,687,806
  Net operating loss .....................     2,271,216           --   
                                               ---------      ---------
                                               7,472,676      4,593,411
  Valuation allowance ....................      (699,908)      (501,257)
                                               ---------      --------- 
  Total deferred tax asset ...............     6,772,768      4,092,154

Deferred tax liabilities:
  Deferred income ........................        39,402         95,465
  Property and equipment .................     8,321,804      8,802,389
  Pipeline partnership ...................        34,845         27,332
                                               ---------      ---------
  Total deferred tax liability ...........     8,396,051      8,925,186
                                               ---------      ---------

Net deferred tax liability ...............   $ 1,623,283    $ 4,833,032
                                               =========      =========


         The net  deferred  tax  liability  as of December  31, 1998 and 1997 is
         reflected in the balance sheet as follows:

Current deferred tax asset ...............   $   (19,417)   $   (18,934)
Long-term deferred tax liability .........     1,642,700      4,851,966
                                               ---------      ---------

                                             $ 1,623,283     $4,833,032
                                               =========      =========
                                    Continued
                                      

<PAGE>


                                                EQUITY OIL COMPANY

                                     NOTES TO FINANCIAL STATEMENTS, Continued



3.       Income Taxes, Continued:

         The provision  for (benefit  from) income taxes differs from the amount
         that would be provided by applying the statutory  U.S.  Federal  income
         tax rate to the income  (loss)  before  income taxes for the  following
         reasons:
<TABLE>
<CAPTION>

                                                   1998           1997           1996
                                            -----------    -----------    -----------

<S>                                         <C>            <C>            <C>         
Federal statutory tax expense (benefit) .   $(2,970,461)   $    13,058    $(2,770,765)
Increase (reduction) in taxes
  resulting from:
     State taxes (net of federal
      benefit) ..........................      (255,742)        (5,323)      (198,849)
     Canadian taxes (net of foreign
        tax credits) ....................       208,046        113,882       (107,549)
     Excess allowable percentage
      depletion .........................       (54,059)      (162,297)      (171,724)
     Investment tax and other credits ...          --          (84,136)      (124,933)
     Taxes due from Canadian audit ......       150,450        374,379           --
     Unrecognized capital loss related
        to impairment of investment
        in Symskaya Exploration, Inc. ...          --             --          727,157
                                            -----------    -----------    -----------

Provision for (benefit from) income taxes   $(2,921,766)   $   249,563    $(2,646,663)
                                            ===========    ===========    ===========
</TABLE>

         At  December  31,  1998,  the  Company  had  approximately  $312,000 of
         alternative  minimum  tax  credit  carryforwards  which can be  carried
         forward indefinitely,  and approximately $700,000 of foreign tax credit
         carryforwards  which begin to expire in 2001. In addition,  the Company
         has approximately  $6,150,000 of net operating loss carryforwards which
         expire in 2018.

4.       Stock-Based Compensation Plan:

         At December  31,  1998,  the Company had one  stock-based  compensation
         plan,  which is described below. The Company applies APB Opinion No. 25
         and related Interpretations in accounting for its plan. Accordingly, no
         compensation  cost has been recognized for options granted to employees
         under  its fixed  stock  option  plan.  Had  compensation  cost for the
         Company's  stock-based  compensation  plan been determined based on the
         fair value at the grant  dates  consistent  with the method of SFAS No.
         123,  the  Company's  net  loss  and loss per  share  would  have  been
         increased to the pro forma amounts indicated below:



                                    Continued
                                       

<PAGE>


                               EQUITY OIL COMPANY

                    NOTES TO FINANCIAL STATEMENTS, Continued






4.      Stock-Based Compensation Plan, Continued:

<TABLE>
<CAPTION>

                                                            1998              1997                1996     
                                                            ----              ----                ----
<S>                                                  <C>                 <C>               <C>         
         Net loss             As reported            $(5,814,884)        $(211,156)        $(5,502,646)
                              Pro forma              $(5,991,191)        $(336,511)        $(5,635,133)

         Net loss per share   As reported                 $(.46)             $(.02)              $(.43)
                              Pro forma                   $(.47)             $(.03)              $(.44)
</TABLE>
          

         Note: Basic and diluted loss per share are the same.

         Under the 1993 Equity Oil Company  Incentive  Stock  Option  Plan,  the
         Company may grant options to its employees for up to 1.4 million shares
         of common  stock.  The  options  may take the form of  incentive  stock
         options,  non-qualified stock options,  and non-qualified stock options
         with tandem  stock  appreciation  rights.  The  exercise  price of each
         option  equals the market price of the  Company's  stock on the date of
         grant,  and an option's  maximum term is 10 years.  Options are granted
         from time to time at the discretion of the Board of Directors, and vest
         over periods of one to five years from the grant date.

         The fair value of each option  grant is  estimated on the date of grant
         using  the  Black-Scholes   option-pricing  model  with  the  following
         weighted-average  assumptions  used for  grants in 1998,  1997 and 1996
         respectively:  expected volatility of 138, 50 and 67 percent, risk-free
         interest  rates of 5.5, 6.3 and 5.4 percent;  expected  life of 5 years
         and dividend yield of zero for all three years.



                                    Continued
                                       

<PAGE>


                               EQUITY OIL COMPANY

                    NOTES TO FINANCIAL STATEMENTS, Continued



4.      Stock-Based Compensation Plan, Continued:
<TABLE>
<CAPTION>


                                                 1998                          1997                          1996                 
                                        ----------------------         ----------------------        ---------------------- 
                                  
                                      Shares    Weighted-Average     Shares   Weighted-Average     Shares     Weighted-Average
Fixed Options                          (000)     Exercise Price       (000)    Exercise Price       (000)      Exercise Price  
-------------                          -----     --------------       -----    --------------       -----      --------------  
<S>                                     <C>          <C>              <C>          <C>                <C>        <C>  
Outstanding at beginning of year        1,141        $4.33            1,076        $4.42              904        $4.22
Granted                                   150         2.50              121         3.56              222         5.13
Exercised                                   -           -                -            -               (39)        3.94
Forfeited                                 (88)        3.87              (56)        4.37              (11)        4.38
                                      -------                       -------                        ------
Outstanding at end of  year             1,203         4.14            1,141         4.33            1,076         4.42
                                       ======                        ======                        ======
Options exercisable at year-end           900                           880                           775
                                      =======                       =======                         =====
Weighted-average fair value of
   options granted during the year                   $2.21                         $1.56                         $3.06

</TABLE>
         The following table  summarizes  information  about fixed stock options
         outstanding at December 31, 1998:

<TABLE>
<CAPTION>
                                                    Options Outstanding                         Options Exercisable                
                                                    -------------------                         -------------------                
    Range of            Outstanding            Remaining        Weighted-Average         Exercisable        Weighted-Average
  Exercise Prices       at 12/31/98        Contractual Life      Exercise Price          at 12/31/98          Exercise Price 
<S>                        <C>                  <C>                 <C>                     <C>                 <C>  
$2.50 to $3.56             353,000              7.54   years        $3.11                   146,200             $3.56
$3.63 to $4.00             281,000              4.03                $3.86                   263,400             $3.88
$4.22 to $5.00             283,000              4.69                $4.51                   268,600             $4.53
$5.13 to $5.13             209,500              7.15                $5.13                   145,900             $5.13
$5.50 to $6.00              76,000              1.62                $5.77                    76,000             $5.77
                       -----------              ----                -----                 ---------             -----
                         1,202,500              5.61                $4.14                   900,100             $4.38
                         =========              ====                =====                   =======             =====
</TABLE>

5.           Geographic Segment Information:

             During 1998, the Company adopted Statement of Financial  Accounting
             Standards  ("FAS") 131,  Disclosure about Segments of an Enterprise
             and  Related  Information.  FAS 131  supersedes  FAS 14,  Financial
             Reporting  for Segments of a Business  Enterprise.  The adoption of
             FAS 131 did not  affect the  Company's  results  of  operations  or
             financial position.

             The Company  operates in the exploration and production  segment of
             the oil and gas industry.  The Company's  operations are located in
             the following geographical areas.

<TABLE>
<CAPTION>

                                         Revenues                                                 Long-lived Assets
                              for the years ended December 31,                                    as of December 31,
                          ----------------------------------------                         -------------------------------
 
                             1998            1997              1996                1998                1997                1996
                         -----------     -----------       -----------          -----------         ----------          -----------
<S>                      <C>             <C>               <C>                 <C>                 <C>                 <C>         
United States            $11,199,836     $14,150,670       $13,508,077         $ 95,009,887        $104,094,883        $ 97,135,423
Canada                     1,521,040       2,306,378         2,607,048            9,397,928           9,277,008           9,011,722
                         -----------     -----------       -----------         ------------         -----------         -----------
Total                    $12,720,876     $16,457,048       $16,115,125         $104,407,815        $113,371,891        $106,147,145
                         ===========     ===========       ===========         ============        ============         ===========

</TABLE>

                                    Continued

                                    
<PAGE>


                               EQUITY OIL COMPANY

                    NOTES TO FINANCIAL STATEMENTS, Continued



5.                    Geographic Segment Information, Continued:

                      Revenue  from a  major  U.S.  oil  company  accounted  for
                      approximately  32 percent of total  revenues  in 1998,  38
                      percent of total  revenues in 1997 and 45 percent of total
                      revenues in 1996.  The  Company  believes  this  purchaser
                      could  be  replaced,  if  necessary,  without  a  loss  in
                      revenue.

6.                    Symskaya Exploration:

                      Symskaya  Exploration,  Incorporated,  a  company  in  the
                      development stage and a Texas corporation (Symskaya),  was
                      formed on November 25, 1991, and is engaged in oil and gas
                      exploration in Russia.  Symskaya holds a Combined  License
                      (License)  which grants it the exclusive right to explore,
                      develop  and  produce  hydrocarbons  on  a  contract  area
                      totaling  approximately  1,100,000  acres in the  Yenisysk
                      District   of  the   Krasnoyarsk   Krai  in  the   Russian
                      Federation.  The  License  has a primary  term of 25 years
                      from November 15, 1993.

                      The work to be performed and the obligations and rights of
                      Symskaya  are set forth in the  License  and a  Production
                      Sharing  Agreement  (PSA) which is an integral part of the
                      License.  Under the License and PSA, Symskaya will provide
                      funding  for all  exploration  and  development  and  will
                      recover  these  costs from 80% of  hydrocarbon  production
                      after  payment of an 8% royalty.  The remaining 20% of any
                      hydrocarbon production,  net of royalty, will be shared by
                      Symskaya and the Russian  government  based on the rate of
                      production. As of December 31, 1998, the Symskaya area had
                      not received approval by the Russian federal government as
                      a production sharing area.

                      Minimum  expenditures  required  under the License and PSA
                      total  $12,000,000  during  the  first  five  years of the
                      License  term,  which began on November  15,  1993.  As of
                      December  31,  1998,  Symskaya  had  satisfied  all of the
                      minimum expenditures required.

                      Symskaya is owned 50% each by Equity Oil Company  (Equity)
                      and Leucadia National  Corporation,  (Leucadia).  Leucadia
                      acquired 50% of the stock of Symskaya effective January 1,
                      1994,  in  exchange  for their  commitment  to spend up to
                      $6,000,000,  in an amount  equal to that  spent by Equity,
                      towards  the  Symskaya   project   through  the  drilling,
                      completion  and/or plugging and abandonment of the initial
                      test  well,  the Lemok  #1.  Pursuant  to a  Shareholders'
                      Agreement,  Leucadia  was not  required to pay any part of
                      the amounts  previously  advanced  by Equity  under a Loan
                      Agreement  with  Symskaya,  with the exception of one-half
                      (1/2) of the interest on a $1,740,519  loan between Equity
                      and Symskaya.  The loan reflects the initial investment by
                      Equity in Symskaya prior to Leucadia's ownership.

                                    Continued

                                       

<PAGE>


                               EQUITY OIL COMPANY

                    NOTES TO FINANCIAL STATEMENTS, Continued






6.                    Symskaya Exploration, Continued:

                      Amounts  advanced by Equity and Leucadia  after January 1,
                      1994 are  treated  as  interest-bearing  notes  payable or
                      equity,   as  mutually   agreed  upon  by  the  respective
                      companies.  The  Shareholder  Agreement with Leucadia also
                      requires that Leucadia share equally in the payment of the
                      one (1%) percent royalty  obligation in favor of Coastline
                      Exploration,  Inc. on future  revenues  from the  Symskaya
                      project.  The  Company's  President  serves on  Leucadia's
                      Board of Directors.

                      The Company's  investment  in Symskaya is being  accounted
                      for using the equity method of accounting.

                      In 1996, Symskaya plugged and abandoned the Lemok #1 well,
                      and charged the drilling costs of the well to expense. Due
                      to  the  uncertainty   relating  to  Symskaya's  obtaining
                      additional   outside   financing   and   proceeding   with
                      development  of the License  area,  all other  capitalized
                      costs on the  Company's  balance  sheet were also  written
                      off,  resulting  in a total  charge to  expense in 1996 of
                      $9,204,394.  Subsequent  to the  plugging  of the Lemok #1
                      well, the Company and Leucadia agreed to suspend  interest
                      payments on Symskaya's note with the Company.  The Company
                      has no current plans to fund future  exploratory  drilling
                      by Symskaya.  The Company's  50% share of  Symskaya's  net
                      loss  in  1998  and  1997  was  $446,758   and   $356,661,
                      respectively.

                      Summarized financial information concerning Symskaya is as
                      follows:

                                                  As of          As of
                                               December 31,   December 31,
                                                  1998            1997         
                                              ------------    ------------
Current assets ............................   $     84,614    $     87,695
Non-current assets ........................      6,195,471       6,053,629
Total assets ..............................      6,280,085       6,141,324

Current liabilities .......................           --            13,699
Non-current liabilities ...................     15,811,910      14,242,094
Accumulated deficit .......................    (14,352,655)    (12,776,251)
Total liabilities and stockholders' deficit   $  6,280,085    $  6,141,324


                                               For the year   For the year 
                                                 Ended           Ended
                                               December 31,    December 31,
                                                  1998             1997         
                                              ------------    -----------

Gross revenues .............................   $    13,867    $     14,217
Net loss ...................................   $(1,576,404)   $ (1,673,926)

                                    Continued

                                       

<PAGE>


                               EQUITY OIL COMPANY

                    NOTES TO FINANCIAL STATEMENTS, Continued






7.            Note Payable:

              In March of 1995,  the Company  obtained a $20  million  Borrowing
              Base Credit  Facility  (the  Facility),  with a commitment  of $17
              million as of December  31, 1998.  The terms of the Facility  call
              for interest  payments  only,  at the lower of prime or LIBOR plus
              2%,  until June 30,  2001,  at which time it  converts to a 4 year
              term note. An unused commitment fee of 3/8% will be charged to the
              Company based on the average daily unused portion of the Facility.
              The Facility is collateralized by all assets of the Company. As of
              December 31, 1998, the outstanding  balance under the Facility was
              $16,500,000 at an average interest rate of 7.26%.

              Future  maturities  on the Facility as of December 31, 1998 are as
              follows:

                        1999                     $         -
                        2000                               -
                        2001                       2,062,500
                        2002                       4,125,000
                        2003                       4,125,000
                        2004                       4,125,000
                        2005                       2,062,500
                                                   ---------
                                                 $16,500,000

              The  Facility  contains  provisions  relating  to  maintenance  of
              certain financial  ratios,  as well as restrictions  governing its
              use. Under  covenants  contained in the Facility,  the Company has
              agreed,  among other things,  not to advance any proceeds from the
              Facility to Symskaya, not to pay dividends,  and not to merge with
              or acquire any other  company  without  the prior  approval of the
              bank.

              Primarily  as a  result  of the  $4  million  property  impairment
              charge,  as of December  31, 1998 the Company was in  violation of
              the "Tangible Net Worth"  covenant  contained in the Facility.  In
              March 1999,  the Company's bank amended the Facility to remedy the
              covenant  violation.  The  Company is now in  compliance  with all
              covenants in the Facility.  Facility fees,  which are reflected as
              other  assets  in  the  accompanying   Balance  Sheets, are  being
              amortized on a straight line basis over 60 months.


                                    Continued

                                       

<PAGE>


                               EQUITY OIL COMPANY

                    NOTES TO FINANCIAL STATEMENTS, Continued




8.            Quarterly Financial Data (Unaudited):

         Quarterly  financial  information for the years ended December 31, 1998
         and 1997 is as follows:

1998 Quarter Ended: ..   December 31    September 30      June 30     March 31
                         -----------    -----------    ----------   ----------

Net revenues .........  $ 3,093,918    $ 3,113,521    $ 3,024,311   $ 3,508,460

Gross margin .........      123,384        301,843        442,379       609,530

Net loss .............   (3,028,324)    (1,250,826)      (893,728)     (642,006)

Basic and diluted loss
   per common share ..  $      (.24)   $      (.10)   $      (.07)  $      (.05)
                        ===========    ===========    ===========   ===========



1997 Quarter Ended: .   December 31    September 30       June 30     March 31
                        -----------    -----------     ----------  -----------

Net revenues ........   $ 4,038,890    $ 3,833,655    $ 3,978,440   $ 4,917,278
 
Gross margin ........     1,242,793      1,252,468      1,382,273     2,274,510

Net income (loss) ...    (1,104,583)       (48,158)       161,210       780,375

Basic and diluted
   income (loss)
     per common share   $      (.09)   $      (.00)   $       .01   $       .06
                        ===========    ===========    ===========   ===========






                                    Continued

                                       

<PAGE>


                               EQUITY OIL COMPANY

                    NOTES TO FINANCIAL STATEMENTS, Continued



9.            Disclosures About Oil and Gas Producing Activities:
<TABLE>
<CAPTION>

Capitalized Costs:
                                                           United States        Canada      Russia           Total
1998:

Unproved oil and gas
<S>                                                        <C>              <C>                       <C>          
  properties ...........................................   $   2,969,999    $      33,224             $   3,003,223
Proved oil and gas
  properties ...........................................      91,206,116        9,364,704               100,570,820
                                                           -------------    -------------             -------------
                                                              94,176,115        9,397,928               103,574,043
Accumulated depreciation,
  depletion and amortization ...........................     (53,212,301)      (7,453,705)              (60,666,006)
                                                           -------------    -------------             -------------

Net capitalized costs ..................................   $  40,963,814    $   1,944,223             $  42,908,037
                                                           =============    =============             =============
Symskaya, equity method
  (see Note 6) .........................................                                    $     --
                                                                                             =======

1997:

Unproved oil and gas
  properties ...........................................   $   3,471,138    $      33,224             $   3,504,362
Proved oil and gas
  properties ...........................................      99,863,977        9,243,784               109,107,761
                                                           -------------    -------------             -------------
                                                             103,335,115        9,277,008               112,612,123
Accumulated depreciation,
  depletion and amortization ...........................     (58,065,779)      (6,292,480)              (64,358,259)
                                                           -------------    -------------             -------------

Net capitalized costs ..................................   $  45,269,336    $   2,984,528             $  48,253,864
                                                           =============    =============             =============
Symskaya, equity method
  (see Note 6) .........................................                                    $     --
                                                                                             =======


1996:

Unproved oil and gas
  properties ...........................................   $   2,532,503    $      33,224             $   2,565,727
Proved oil and gas
  properties ...........................................      93,837,818        8,978,498               102,816,316
                                                           -------------    -------------             -------------
                                                              96,370,321        9,011,722               105,382,043
Accumulated depreciation,
  depletion and amortization ...........................     (55,259,210)      (5,996,677)              (61,255,887)
                                                           -------------    -------------             -------------

Net capitalized costs ..................................   $  41,111,111    $   3,015,045             $  44,126,156
                                                           =============    =============             =============
Symskaya, equity method
  (see Note 6) .........................................                                    $     --
                                                                                             =======
</TABLE>



                                    Continued

                                       

<PAGE>


                               EQUITY OIL COMPANY

                    NOTES TO FINANCIAL STATEMENTS, Continued



9.            Disclosures About Oil and Gas Producing Activities, Continued:

              Costs Incurred in Oil and Gas Property Acquisition, Exploration
              and Development Activities:

1998:                        United States    Canada       Russia        Total

Acquisition of properties:
  Proved .................   $     --           --           --     $     --
  Unproved ...............      124,066         --           --        124,066
Exploration costs ........    4,423,128   $   27,529         --      4,450,657
Development costs ........    2,270,849      267,392         --      2,538,241
Symskaya, equity method ..         --           --     $  446,758      446,758

1997:

Acquisition of properties:
  Proved .................   $3,226,494         --           --     $3,226,494
  Unproved ...............    1,227,117         --           --      1,227,117
Exploration costs ........    4,468,531   $   25,103         --      4,493,634
Development costs ........    4,169,802       43,125         --      4,212,927
Symskaya, equity method ..         --           --     $  356,661      356,661


1996:

Acquisition of properties:
  Proved .................   $2,038,244         --           --     $2,038,244
  Unproved ...............      474,757         --           --        474,757
Exploration costs ........    4,492,876   $   30,838         --      4,523,714
Development costs ........    3,287,637       43,728         --      3,331,365
Symskaya, equity method ..         --           --     $3,043,952    3,043,952








                                    Continued

                                       

<PAGE>


                               EQUITY OIL COMPANY

                    NOTES TO FINANCIAL STATEMENTS, Continued



9.            Disclosures About Oil and Gas Producing Activities, Continued:

<TABLE>
<CAPTION>

Results of Operations (Unaudited):

1998:                                             United States       Canada          Russia          Total     

<S>                                               <C>             <C>             <C>             <C>         
Oil and gas sales .............................   $ 11,199,836    $  1,521,040                    $ 12,720,876
Production costs ..............................     (5,665,047)       (568,908)                     (6,233,955)
Exploration expenses ..........................     (2,954,780)        (22,212)                     (2,976,992)
Depreciation, depletion and amortization ......     (4,720,913)       (308,206)                     (5,029,119)
Impairment of proved
    oil and gas properties ....................     (4,015,158)                                     (4,015,158)
Equity loss in Symskaya Exploration, Inc. .....                                   $   (446,758)       (446,758)
                                                  ------------    ------------    ------------    ------------
                                                    (6,156,062)        621,714        (446,758)     (5,981,106)
Imputed income tax benefit (expense) ..........      2,308,523        (276,663)        167,534       2,199,394
                                                  ------------    ------------    ------------    ------------
Results of operations from producing activities   $ (3,847,539)   $    345,051    $   (279,224)   $ (3,781,712)
                                                  ============    ============    ============    ============

1997:

Oil and gas sales .............................   $ 14,150,670    $  2,306,378                    $ 16,457,048
Production costs ..............................     (5,300,909)       (639,899)                     (5,940,808)
Exploration expenses ..........................     (3,718,531)        (21,086)                     (3,739,617)
Depreciation, depletion and amortization ......     (4,385,015)       (290,398)                     (4,675,413)
Impairment of proved
    oil and gas properties ....................       (411,894)                                       (411,894)
Equity loss in Symskaya Exploration, Inc. .....                                   $   (356,661)       (356,661)
                                                   ------------    ------------    ------------    ------------
                                                       334,321       1,354,995        (356,661)      1,332,655
Imputed income tax benefit (expense) ..........         77,745        (245,790)        133,748         (34,297)
                                                  ------------    ------------    ------------    ------------
Results of operations from producing activities   $    412,066    $  1,109,205    $   (222,913)   $  1,298,358
                                                  ============    ============    ============    ============

1996:

Oil and gas sales .............................   $ 13,508,077    $  2,607,048                    $ 16,115,125
Production costs ..............................     (4,976,633)       (935,495)                     (5,912,128)
Exploration expenses ..........................     (3,153,897)        (27,936)                     (3,181,833)
Depreciation, depletion and amortization ......     (3,838,202)       (454,035)                     (4,292,237)
Impairment of proved
    oil and gas properties ....................       (237,279)                                       (237,279)
Equity loss in Symskaya Exploration, Inc. .....                                   $ (9,204,394)     (9,204,394)
                                                  ------------    ------------    ------------    ------------
                                                     1,302,066       1,189,582      (9,204,394)     (6,712,746)
Imputed income tax benefit (expense) ..........       (239,514)       (258,048)      3,283,105       2,785,543
                                                  ------------    ------------    ------------    ------------
Results of operations from producing activities   $  1,062,552    $    931,534    $ (5,921,289)   $ (3,927,203)
                                                  ============    ============    ============    ============

</TABLE>

The imputed income tax benefit (expense) is hypothetical and determined  without
regard to the Company's  deduction for general and  administrative  and interest
expense.




                                    Continued

                                       

<PAGE>


                               EQUITY OIL COMPANY

                    NOTES TO FINANCIAL STATEMENTS, Continued



9.               Disclosures About Oil and Gas Producing Activities, Continued:

                 Reserves and Future Net Cash Flows (Unaudited):
                 Estimates  of reserve  quantities  and related  future net cash
                 flows are  calculated  using  unescalated  year-end oil and gas
                 prices and operating  costs,  and may be subject to substantial
                 fluctuations  based on the  prices in effect at the end of each
                 year.  Reserve  revisions  occur when the  economic  limit of a
                 property is lengthened or shortened due to changes in commodity
                 pricing.  The following  table sets forth the weighted  average
                 prices used in  calculating  estimated  reserve  quantities and
                 future net cash flows at the end of 1998, 1997 and 1996:


<TABLE>
<CAPTION>
                                       United States         Canada            Total     
                                        Oil      Gas       Oil     Gas      Oil    Gas 

                 <S>                  <C>       <C>       <C>     <C>     <C>      <C>  
                 December 31, 1998    $10.97    $2.06     $9.92   $1.49   $10.80   $1.95

                 December 31, 1997    $15.49    $2.13    $12.35   $1.51   $14.99   $2.03

                 December 31, 1996    $24.80    $3.28    $22.26   $1.52   $24.36   $2.84
</TABLE>



               Estimates of Proved Oil and Gas Reserves(Unaudited):

               The  following  tables  present the  Company's  estimates  of its
               proved oil and gas reserves.  The Company emphasizes that reserve
               estimates  are  inherently  imprecise  and that  estimates of new
               discoveries  are more  imprecise  than those of producing oil and
               gas properties. Accordingly, the estimates are expected to change
               as future information  becomes  available.  Reserve estimates are
               prepared by the Company and audited by the Company's  independent
               petroleum reservoir  engineers,  Fred S. Reynolds and Associates,
               who have  issued  a  report  expressing  their  opinion  that the
               reserve  information  in the following  tables  complies with the
               applicable  rules  promulgated  by the  Securities  and  Exchange
               Commission  and the Financial  Accounting  Standards  Board.  The
               volumes  presented  on the  following  pages are in  thousands of
               barrels for oil and thousands of mcf for gas.






                                   Continued

                                       

<PAGE>


                               EQUITY OIL COMPANY

                    NOTES TO FINANCIAL STATEMENTS, Continued



9.             Estimates of Proved Oil and Gas Reserves, Continued:

<TABLE>
<CAPTION>
Reserves and Future Net Cash Flows (Unaudited):

                                                                 United States             Canada                   Total          
December 31, 1998:                                              Oil         Gas         Oil         Gas         Oil         Gas
--------------------------------------------------------   --------    --------    --------    --------    --------    --------
  Proved developed and undeveloped reserves:
<S>                                                           <C>        <C>          <C>         <C>         <C>        <C>   
  Beginning of year ....................................      7,168      15,457       1,252       3,452       8,420      18,909
  Revisions of previous estimates ......................     (1,817)       (459)        (79)        494      (1,896)         35
  Extensions and discoveries ...........................        361       2,505        --          --           361       2,505
  Production ...........................................       (595)     (2,092)        (97)       (347)       (692)     (2,439)
                                                           --------    --------    --------    --------    --------    --------
  End of year ..........................................      5,117      15,411       1,076       3,599       6,193      19,010
                                                           ========    ========    ========    ========    ========    ========

Proved developed reserves:
  Beginning of year ....................................      6,972      11,932       1,252       3,452       8,224      15,384
  End of year ..........................................      4,870      12,683       1,076       3,599       5,946      16,282


                                                                 United States             Canada                   Total
December 31, 1997:                                              Oil         Gas         Oil         Gas         Oil         Gas
--------------------------------------------------------   --------    --------    --------    --------    --------    --------
  Proved developed and undeveloped reserves:
  Beginning of year ....................................      7,252      14,910       1,117       2,707       8,369      17,617
  Revisions of previous estimates ......................       (806)       (694)        251       1,194        (555)        500
  Acquisitions of minerals in place ....................      1,085         438        --          --         1,085         438
  Extensions and discoveries ...........................        202       2,423        --          --           202       2,423
  Sales of minerals in place ...........................        (45)       --          --          --           (45)       --
  Production ...........................................       (520)     (1,620)       (116)       (449)       (636)     (2,069)
                                                           --------    --------    --------    --------    --------    --------
  End of year ..........................................      7,168      15,457       1,252       3,452       8,420      18,909
                                                           ========    ========    ========    ========    ========    ========

Proved developed reserves:
  Beginning of year ....................................      7,219      11,133       1,117       2,707       8,336      13,840
  End of year ..........................................      6,972      11,932       1,252       3,452       8,224      15,384


                                                                 United States              Canada                  Total
December 31, 1996:                                              Oil         Gas         Oil         Gas         Oil         Gas
--------------------------------------------------------   --------    --------    --------    --------    --------    --------
Proved developed and undeveloped reserves:
  Beginning of year ....................................      6,563      14,819       1,187       3,205       7,750      18,024
  Revisions of previous estimates ......................        176        (234)         49         104         225        (130)
  Acquisition of minerals in place .....................        949          38        --          --           949          38
  Sales of minerals in place ...........................         (6)       (214)       --           (54)         (6)       (268)
  Extensions and discoveries ...........................         88       1,827        --            40          88       1,867
  Production ...........................................       (518)     (1,326)       (119)       (588)       (637)     (1,914)
                                                           --------    --------    --------    --------    --------    --------
  End of year ..........................................      7,252      14,910       1,117       2,707       8,369      17,617
                                                           ========    ========    ========    ========    ========    ========
Proved developed reserves:
  Beginning of year ....................................      6,527      11,238       1,139       3,068       7,666      14,306
  End of year ..........................................      7,219      11,133       1,117       2,707       8,336      13,840

</TABLE>




                                                     Continued
                                       

<PAGE>


                                                EQUITY OIL COMPANY

                                     NOTES TO FINANCIAL STATEMENTS, Continued




9.             Disclosures About Oil and Gas Producing Activities, Continued:

<TABLE>
<CAPTION>
               Standardized  Measure  of  Discounted  Future  Net Cash Flows and
               Changes   Therein   Relating  to  Proved  Oil  and  Gas  Reserves
               (Unaudited):

                                                                    Thousands of Dollars                    
1998                                                        United States    Canada       Total      
----                                                        -------------    ------       -----      
<S>                                                           <C>          <C>          <C>      
Future cash inflows .......................................   $  88,549    $  15,442    $ 103,991
Future production and development costs ...................     (54,825)      (7,811)     (62,636)
                                                              ---------    ---------    ---------
Future net cash flows before income taxes .................      33,724        7,631       41,355
10% annual discount for estimated timing
   of cash flows ..........................................     (13,176)      (2,969)     (16,145)
                                                              ---------    ---------    ---------
Standardized measure of discounted future
   net cash flows before income taxes .....................      20,548        4,662       25,210
Future income taxes, net of 10% annual discount ...........      (1,479)        (929)      (2,408)
                                                              ---------    ---------    ---------
Standardized measure of discounted future
   net cash flows .........................................   $  19,069    $   3,733    $  22,802
                                                              =========    =========    =========


                                                                        Thousands of Dollars
1997                                                         United States    Canada       Total
----                                                         -------------    ------       -----
Future cash inflows .......................................   $ 149,066    $  19,350    $ 168,416
Future production and development costs ...................     (93,945)      (8,470)    (102,415)
                                                              ---------    ---------    ---------
Future net cash flows before income taxes .................      55,121       10,880       66,001
10% annual discount for estimated timing
   of cash flows ..........................................     (24,778)      (3,814)     (28,592)
                                                              ---------    ---------    ---------
Standardized measure of discounted future
   net cash flows before income taxes .....................      30,343        7,066       37,409
Future income taxes, net of 10% annual discount ...........      (6,071)      (2,439)      (8,510)
                                                              ---------    ---------    ---------
Standardized measure of discounted future
   net cash flows .........................................   $  24,272    $   4,627    $  28,899
                                                              =========    =========    =========


                                                                      Thousands of Dollars
1996                                                         United States    Canada      Total
----                                                         -------------    ------      -----
Future cash inflows .......................................   $ 230,760    $  28,073    $ 258,833
Future production and development costs ...................     (98,696)      (6,263)    (104,959)
                                                              ---------    ---------    ---------
Future net cash flows before income taxes .................     132,064       21,810      153,874
10% annual discount for estimated timing
   of cash flows ..........................................     (64,955)      (9,917)     (74,872)
                                                              ---------    ---------    ---------
Standardized measure of discounted future
   net cash flows before income taxes .....................      67,109       11,893       79,002
Future income taxes, net of 10% annual discount ...........     (19,462)      (4,804)     (24,266)
                                                              ---------    ---------    ---------
Standardized measure of discounted future
   net cash flows .........................................   $  47,647    $   7,089    $  54,736
                                                              =========    =========    =========

</TABLE>



                                    Continued
                                                      
                                       

<PAGE>



                               EQUITY OIL COMPANY

                    NOTES TO FINANCIAL STATEMENTS, Continued


9.             Disclosures About Oil and Gas Producing Activities, Continued:

               Standardized  Measure  of  Discounted  Future  Net Cash Flows and
               Changes   Therein   Relating  to  Proved  Oil  and  Gas  Reserves
               (Unaudited), Continued:


               Future net cash flows were  computed  using  year-end  prices and
               costs,  and year-end  statutory tax rates with  consideration  of
               future  tax rates  already  legislated  (adjusted  for  permanent
               differences that related to proved oil and gas reserves).


               Principal  sources  of  change  in the  standardized  measure  of
               discounted future net cash flow are as follows:


                                                      Thousands of Dollars      
                                                1998        1997        1996    
Sales and transfers of oil and gas produced,
   net of production costs ...................  $ (6,487)  $(10,516)  $(10,203)
Net changes in prices and production costs ...   (10,019)   (45,280)    27,483
Extensions and discoveries, less related cost      2,098      1,639      2,374
Purchases of minerals in place ...............      --        3,787      7,174
Sales of minerals in place ...................      --         (339)      (116)
Changes in estimated future development costs      2,630     (1,447)       938
Revisions of previous quantity estimates .....    (4,495)    (1,573)     1,495
Accretion of discount ........................     3,558      7,912      4,286
Net change in income taxes ...................     3,315     18,100    (12,045)
Changes in production rates (timing) and other     3,303      1,880      2,903
                                                --------   --------   --------
                                                $ (6,097)  $(25,837)  $ 24,289
                                                ========   ========   ========



















                                       

<PAGE>






ITEM 9.  DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURES: 

None.
                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF COMPANY

The  information   contained  under  the  headings  Election  of  Directors  and
Continuing  Directors and Executive  Officers  contained on pages 2 and 3 in the
definitive  proxy statement to be filed in connection with the Company's  annual
meeting on May 12, 1999 is  incorporated  herein by  reference in answer to this
item.

ITEM 11.  EXECUTIVE COMPENSATION

The information  contained under the heading  Executive  Compensation on pages 6
through 9 in the definitive  proxy  statement to be filed in connection with the
Company's annual meeting on May 12, 1999 is incorporated  herein by reference in
answer to this item.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
          MANAGEMENT

The information  contained under the headings  Security  Ownership of Management
and Voting Securities & Principal  Holders Thereof,  contained on pages 4 and 11
in the definitive  proxy  statement to be filed in connection with the Company's
annual meeting on May 12, 1999 is incorporated  herein by reference in answer to
this item.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

None.



                                       

<PAGE>



                                     PART IV

ITEM 14.  Exhibits, Financial Statement Schedules and Reports on
          Form 8-K:

(a)  (1)  Financial Statements:                                      Page

     Report of Independent Accountants                                16
     Financial Statements:

          Balance Sheets as of December 31, 1998 and 1997             17

          Statements of Operations for the years ended
            December 31, 1998, 1997 and 1996                          18

          Statements of Changes in Stockholders' Equity
            for the years ended December 31, 1998, 1997 and 1996      19

          Statements of Cash Flows for the years ended
            December 31, 1998, 1997 and 1996                          20

          Notes to Financial Statements                               21

     (3)  Exhibits                                                    39

          (3) (i) Restated Articles of Incorporation.  Incorporated by reference
          from the annual  report on Form 10-K for the year ended  December  31,
          1995.

             (ii) Amended  By-Laws.  Incorporated  by reference  from the annual
          report on Form 10- K for the year ended December 31, 1997.

          (10) Material Contracts. Change in Control Compensation Agreements for
          Paul M. Dougan, James B. Larson, and Clay Newton. Incorporated by ref-
          erence from the annual report on Form 10-K for the year ended December
          31, 1997.

          (21) Subsidiaries. Incorporated by reference from the annual report on
          Form 10-K for the year ended December 31, 1995.

          (23)  Consent  of  Experts.  Consent  of  PricewaterhouseCoopers   LLP
          regarding Form S-8 Registration.

(b)Reports on Form 8-K

          None.



                                       

<PAGE>

                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

     EQUITY OIL COMPANY


     By  Paul M. Dougan     
         --------------     
         President
         Chief Executive Officer


     By  Clay Newton         
         -----------         
         Treasurer
         Chief Financial Officer
         Principal Accounting Officer

Date:    March 15, 1999    

     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
Registrant and in the capacities and on the dates indicated.



   Douglas W. Brandrup                       Joseph C. Bennett
   -------------------                       -----------------
        Director                                  Director
      March 15, 1999                           March 15, 1999    
      --------------                           --------------    
          Date                                     Date

    William D. Forster                      Philip J. Bernhisel
    ------------------                      -------------------
        Director                                  Director

      March 15, 1999                           March 15, 1999    
      --------------                           --------------    
          Date                                     Date

     Randolph G. Abood                       W. Durand Eppler
     -----------------                       ----------------
          Director                                Director

      March 15, 1999                           March 15, 1999    
      --------------                           --------------    
          Date                                     Date

     William P. Hartl     
     ----------------     
         Director

      March 15, 1999      
      --------------      
          Date